More than half of consumers change shopping habits after hearing about safety issues

Posted by Daniel Palmer on 10th November 2008

The buying habits of consumers change dramatically and cost companies millions when product safety and quality issues arise, according to a new study released by Deloitte.

More than half of American consumers responding (58 per cent) who heard about product safety and/or quality problems altered their buying habits, according to the survey. These consumers turned away from such products for more than nine months, on average, increasing the likelihood that they would discontinue the use of the product or brand entirely.

“Our research shows that consumers are becoming less tolerant of recalls, with more than 50 percent changing their product choices,” said Pat Conroy, Deloitte LLP’s vice chairman and consumer products practice leader. “As these consumers continue to buy different products, product manufacturers can expect lower sales and run the risk of damage to their brands.”

The survey, “Food and Product Safety and Its Effect on Consumer Buying Habits,” addresses consumer behavior around product safety and product quality issues in general. Specifically, it focuses on key issues in four product categories:

* Toys
* Consumer electronics
* Fresh food
* Packaged food/beverages

Of these categories, changes in buying habits were most common for fresh food and packaged food/beverage. Roughly half (49%) of respondents indicated they were extremely concerned about product safety, with the greatest fears coming from women (53%) and consumers 55 years of age and older (56%). All in all, there is a wide awareness about product safety and quality problems, and more than half of respondents (54%) said they were more worried about the safety of fresh food products than they were a year ago.

Global Concerns
The global lines that were once drawn have now begun to blur, and corporate globalization has created “businesses without borders.” However, although globalization is an increasingly valuable part of doing business, roughly two-thirds of consumers surveyed (65 per cent) were extremely concerned about the safety of products produced outside their home country, with the greatest apprehension coming from older consumers.

Approximately three-quarters of the overall respondents (73 per cent) were extremely concerned about the safety of products produced in China, with half having the same doubts about products produced in Southeast Asia and Mexico. The milk contamination scandal in China, which caused about 54,000 infants to fall ill and resulted in four deaths, could be expected to have further damaged the reputation of the host of this year’s Olympics (the survey was conducted on September 3 – before the fallout from the melamine contamination).

The Demand for More Information

As products fall under greater scrutiny, consumers reported they would like more information about the safety of food products provided on packaging (86%), company web sites (81%) and by the government (81%). Some 67 per cent suggested that food product labels with country of origin labeling, certification of product testing and certification of quality testing would be extremely important in their buying decisions.

“Consumers’ increased sensitivity of product safety and quality is having a long-term effect on business,” Conroy advised. “Product recalls impact companies’ revenues and share price, as well as market share and brand perception. We’ve seen that, while some companies can manoeuvre through recalls relatively unscathed, others suffer catastrophic damage.”

The research shows that some of the key factors that drive the extent of a product recall’s impact range include: the extent of the company’s product diversification; if the recall is specifically for a branded product; the strength of the company’s brand when the incident occurred; and how the company responds.

“Companies are meeting consumers’ concerns by upgrading or expanding safety procedures including stricter safety standards, testing and third-party audits, and government intervention is driving change,” Conroy noted.