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?
Updated May 26, 2009 and originally published March 20, 2008.