RIS News, a retail technology publication, announced some interesting findings recently related to consumer shopping behavior.
According to Deborah Weinswig of Citi Investment Research, the recession is creating more bargain hunters and transforming our shopping style in four key ways:
1. “Trading Down” to Private Label
There’s a cost benefit to going generic, and store brand sales are increasing at stores like BJs, Costco and Target. People are becoming less willing to pay 20% more on average just for a label. Of course, this means the marketing folks out there are trying even harder to build brand loyalty to justify their premium prices.
2. “Trading Down” to Lower-Priced Products
Higher food costs (5.8% inflation in January 2008) are causing consumers to examine their grocery bills more closely, and grocers are commenting on a shift from “steak to chicken.” The USDA is forecasting more increases in the near term, so you may be seeing less filet mignon and more ramen noodles on your dinner table soon. Luckily, there are some great sites out there to help you achieve great culinary feats with less expensive ingredients.
3. “Trading Down” to Cheaper Channels
Not only are consumers buying less expensive goods, they’re also visiting more discount stores. RIS details how Wal-Mart is again trumping Target:
Around the last recession, Wal-Mart outcomped Target almost every month (5/00-7/03) and that reversed when the economy strengthened (8/03-11/07). Now for 3 months in a row, we have seen Wal-Mart outcomp Target and we believe this is the beginning of a longer-term trend.
4. “Trading In” From Restaurants
Cooking at home is becoming a more appealing option for many, as I myself can attest after spending $40 on 2 Pizzeria Uno chicken salads for dinner. (What was I thinking?)
2007 brought the greatest year-over-year increase in at-home food sales since the 1940s, a 240 basis point increase. After remaining flat since 2001, dining in grew to 53.2% of total food expenditures last year, and to 54.6% in January 2008. Perhaps we should thank Rachael Ray and her cult of the 30-minute meal.
Have your shopping styles been affected as the economy slows? What changes have you made?
Cost-Cutting Consumers Trade Down from Steak to Chicken [RIS News]
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How has my shopping changed under higher prices for food items? I use less meat in recipes and debate with myself over how much meat to buy during my once monthly grocery shopping. I switched from grated cheese to chunk cheese that I grate myself. Really only minor changes as I can still shop within my budget. I usually make my own meals even before prices rose but have been buying fewer convenience items.
With the recent inflation in gas prices and food costs, I travel less and cook more during weekends for my office lunches. Good news I just bought a home within 30 minute drive to my office, so that cuts down my commute significantly. Bad news is that I have to stay in it for a long2 time.
My shopping habits really haven’t changed much – then again I’m not a big consumer. But I pay attention to gas and this upcoming baseball season (I’m a b-ball junkie) I’ll be traveling less to see games in other cities. I’m also more conscious about combining trips to run errands – looking at what parts of town I’ll be in and combining trips. But I should be doing this anyway.
As for food – we eat a lot of chicken anyway. We eat quality food at home, but its inexpensive – just suits our tastes more. I am looking at prices more in the stores and trying to cut back. But the rising prices in restaurants is certainly scaring me away.
I haven’t changed my habits at all but then again, I was pretty frugal to begin with. I drive a tiny Corolla and live within a few miles of work, so I don’t worry about gas prices and since I don’t eat out much anyway, that’s not a concern. One thing that would get to me is a sudden rise in beer prices but so far so good.
I try to just spend less in general. I usually buy private label anyway so that remains the same. I’m still eating out a bit but I try to order lower cost food and try cheaper restaurants.
I definately see these trends in my own life. Last week we went to Walmart for our grocery shopping instead of Target and found it was about 10-15% less expensive for the total bill. However the store was dirty, lines were long, and employees were much less friendly. It is a trade off we will have to make if food costs keep growing faster than my income.
I already bought the store brand for many products, sadly I found this week that the Walmart reduced cal yogurt is not nearly as good as the Archer Farms (Target brand) yogurt. However, it is a difference of $0.50 per at Target vs. $0.33 at Walmart.
As for eating out… I still spend too much, but lately I’ve moved away from “sit down” full service restaurants and more toward quick casual. New favorites are Moe’s, Mama Fu’s, and Jason’s Deli. All very tasty, fast, and about $15 for two people at dinner.
No changes. Unless your personal situation changes you shouldn’t need to change. If you do, almost all the time you should have changed when the economy was good.
Do people have too much personal debt? Yes. Does a bad economy call for action on this where a good economy did not? No. Do people save too little for retirement? Yes. Does a bad economy call for action on this where a good economy did not? No.
I was doing what I thought was right 10 years ago, last year and this year. I have never seen any reason to change my personal financial decisions based upon the economy.