Shoppers continue to restrict food spend

July 09, 2013

Rises in day-to-day living costs take their toll on food spend in households of every income.

For supermarkets to grow sales, consumers have to feel better about their ability to spend.  

There’s not much in the economy to lift their spirits, except for the start of a rebound in housing prices, which are still too low for homeowners’ tastes. It’s part of a scene where, including inflation, the average U.S. household has recovered just 45% of its pre-recession wealth, says the Federal Reserve Bank of St. Louis.

The current wallet pummeling by rises in day-to-day costs contrasts with general press headlines about recovery. “Despite improvements, consumers are still frigid about robust spending. We are…waiting to see how long it will take them to thaw out from the mindset created by the conditions of the past five years,” says Ed Farrell, director of consumer insight, Consumer Reports National Research Center.

It could take a while. Allstate Insurance released a study done for it by FTI Consulting earlier this year. It said, “More than four in 10 Americans live paycheck to paycheck, and nearly one in 10 doesn’t earn enough to pay for essentials,” the Los Angeles Times reports.

A new Nielsen consumer survey points out the cumulative effect many factors have on food/household/HBC spend. Through 2013 so far, 64% of U.S. households say they feel pain from rises in food prices, 58% gas prices, 40% utility/energy bills, 30% healthcare costs, and 23% the payroll tax hike.

All of these factors but the last affect lowest-income households (under $25K) to a far greater extent, notes Nielsen Homescan data March 14-May 6.  

Yet households at both income extremes (also including $200K+) react the same way to rising food prices. According to Nielsen, 66% seek out deals, live on a tighter budget, and buy fewer items they don’t need. Unit sales declines in all outlets combined, including convenience stores, were most evident in these edible categories during the 19 weeks ended May 11:  ice (-14%), gum (-7%), frozen novelties (-7%), canned seafood (-6%), salad dressings/mayonnaise/toppings (-3%), shelf-stable juices and drinks (-3%), non-carbonated soft drinks (-2%), and ready-to-serve prepared foods (-2%), the data show.