‘Found gasoline money’ is going to groceries

Articles
December 24, 2008

The roller coaster ride of 2008 oil prices is currently in steep decline, and no one knows for how long. What we do know is that in this extraordinarily difficult year, consumers will take their breaks where they find them. This ‘giveback’ does put more cash in people’s pockets in the short-term, but the amount of spending it leads to will likely be less because people need to pay back debt, start recouping investment losses, and build safety funds in case they should lose their jobs. Consumer confidence is lower than the shallowest oil puddle. Still, there’s one area where America needs to keep spending—and that is on food and beverage, and other household essentials. “OPEC’s loss is grocers’ gain…the grocery store is the most likely place for Americans to spend savings from the pump,” said Toronto-based retail analytics firm Precima, in framing their new research findings. Their online survey of 45,000 U.S. households shortly after Thanksgiving (conducted by ICOM Information & Communications) yielded more than 3,000 projectable responses from U.S. consumers, who identified ways they use money saved on gasoline: Groceries led the list at 48%. Savings, the #2 activity at 42%, was trailed by holiday gift buying (37%), paying off credit cards (30%), entertainment (10%) and other (14%).

The roller coaster ride of 2008 oil prices is currently in steep decline, and no one knows for how long. 

What we do know is that in this extraordinarily difficult year, consumers will take their breaks where they find them. This ‘giveback’ does put more cash in people’s pockets in the short-term, but the amount of spending it leads to will likely be less because people need to pay back debt, start recouping investment losses, and build safety funds in case they should lose their jobs.

Consumer confidence is lower than the shallowest oil puddle. Still, there’s one area where America needs to keep spending—and that is on food and beverage, and other household essentials.

“OPEC’s loss is grocers’ gain…the grocery store is the most likely place for Americans to spend savings from the pump,” said Toronto-based retail analytics firm Precima, in framing their new research findings. Their online survey of 45,000 U.S. households shortly after Thanksgiving (conducted by ICOM Information & Communications) yielded more than 3,000 projectable responses from U.S. consumers, who identified ways they use money saved on gasoline:  Groceries led the list at 48%. Savings, the #2 activity at 42%, was trailed by holiday gift buying (37%), paying off credit cards (30%), entertainment (10%) and other (14%).

Even more dramatic, 55% of survey respondents who suffered a direct financial loss in this recession are spending this ‘found money’ on groceries. And 59% of lower-income respondents who take in less than $35,000 per year have gone from gas to groceries.

The recession is also changing shopping practices, the survey found:
•    Nearly two out of three (65%) said their pantry loading is more selective. Some 27% can only afford to buy what they need week-to-week. Another 35% stock up more than they used to, but only with items on sale.  “Given the importance of winning the stockup trip in key center-store categories, this is a clear call to retailers to look at pricing and promotional strategies for these items,” said Brian Ross, general manager, Precima.
•    Fresh produce (76%), meat and seafood (72%) and dairy (71%) were the areas of the supermarket cited most often as “likely to make them [respondents] switch to get a better price.”  Next were paper products (62%), canned foods (55%), snacks-beverage-candy (53%), convenience foods (41%), deli (39%), and baby products (15%).