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Consumers may be looking a bit thinner these days — or at least their grocery bags are. According to new research from Digital Research and ThinkVine that was presented in a recent webinar, 46 percent of U.S. consumers have cut back on grocery purchases this year, and 45 percent expect to make additional cutbacks to their overall spending over the next six months.
Drawn from the responses of more than 1,000 grocery shoppers to an online survey taken in October, the study found that 42 percent of respondents maintained their grocery spending levels from 2008. About half (51 percent) plan to maintain their overall budgets for at least the next six months. Only 4 percent expect their spending to increase.
“We’re not really seeing a huge number of people willing to go back to what they were doing before,” said Jane Mount, EVP of Kennebunk, Maine-based Digital Research, Inc. and co-presenter of the webinar. “People are buying what they need versus vs. what they want. I think that we’re entering an era of conservatism.”
Debra Patek, chief economist and co-founder of Cincinnati-based ThinkVine Corp. and co-presenter of the webinar, added, “There’s been a lot of discussion in the economic community as to whether the recession will have a long-term impact that really we haven’t seen in prior recessions or since the Great Depression, which led to generational shifts in spending. That’s the big question that everybody wants to know now.”
The majority of shoppers (78 percent) revealed that price was extremely or very important to their final purchasing decisions. To save money and stretch budgets, consumers over the last three months reduced spending on non-essentials (59 percent), stocked up on sale items (57 percent), used more coupons (52 percent) and reduced impulse purchases (50 percent).
Trade-downs were popular as a money-saving strategy in the third quarter. Forty-four percent purchased store brands, and 36 percent switched to lower-priced national brands (an uptick of 6 percent from the second quarter 2009). Trade-downs to store brands during the third quarter 2009 were most popular among OTC pharmaceuticals (44 percent), milk (33 percent), paper towels (32 percent) and bread (29 percent).
Consumers also changed the stores where they’re spending their money. Dollar stores (33 percent), mass merchandisers (29 percent) and farmers’ markets (17 percent) have grown in popularity, while visits to convenience stores (down 36 percent), drug stores (down 31 percent), grocery stores (down 30 percent) and warehouse clubs (down 17 percent) have declined.
Meeting consumer demand for the lowest price is a key challenge to retailers, according to Mount, causing a shift away from grocery stores and reducing basket totals. But she emphasized that with the right approach to their store and private label offerings, retailers may be able to connect with consumers on tighter budgets.
“[Retailers] have to have a relevant and strong store brand. The store brand is where they can get great deals,” Mount said. “They need to talk about … the things that still matter to consumers — healthful eating, freshness, environmentally friendly products … and they can secondarily talk about making it a better shopping experience.”