Stores helping the poor get by

Articles
October 12, 2010

Stores helping the poor get by

So many songs about people living paycheck to paycheck imprint this widespread pain in American pop culture, and help sensitize some retailers to the recurring stress in households stre-t-ch-ing their budgets to have basic necessities.

So many songs about people living paycheck to paycheck imprint this widespread pain in American pop culture, and help sensitize some retailers to the recurring stress in households stre-t-ch-ing their budgets to have basic necessities. The growing traffic to banners such as Save-A-Lot, Bottom Dollar and Grocery Outlet, as well as to mass and dollar stores for food and household goods, reproves how chief household shoppers go to great lengths to save money.

Among the most vulnerable families are the ones on food stamps (more recently named the Supplemental Nutritional Assistance Program). Many of them watch the clock tick to the start of a new month when a new stipend is available and they can once again stock up with basics.  

According to a National Public Radio report, one practice is making midnight runs to Walmart on the start of the first day of the month to replenish the pantries and refrigerators at home. These families don’t make it comfortably until the next month arrives either. Plenty are on the edge: NPR said that 3.7 million Americans joined the poverty roles in 2009, defined as a families of four living on just under $22,000 per year. They comprise 14% of the population.

The Lempert Report sees their economic pressures getting worse soon. Commodity, meat and poultry prices are on the rise, and cost hikes haven’t been fully passed along yet. They will be, however, probably before year’s end. (More details in our upcoming price forecast story.)  This will lengthen the gap between food and beverage prices and their ability to pay.

Walmart, for one, understands the monetary ebb and flow of these low-income shoppers. It displays larger item packs at the start of the month when pantry reloads occur, and smaller sizes later in the month, when theses families are filling in as needed. “It makes sure shelves have plenty of diapers and formula,” noted Walmart executive Bill Simon, on a recent call with analysts, noted NPR.

Clearly, Walmart and the dollar stores are feverishly pursuing lower-income shoppers with smaller pack sizes of toilet paper, garbage bags and paper towels that cost $1 or less (these are in about one-quarter of Walmart’s stores, according to The New York Times). Dollar stores may still have the upper hand: SymphonyIRI Group said trips to dollar stores rose 2.6% between June 2009 and June 2010 vs. a year earlier, while trips to mass merchants fell by 7.0%. 

Supermarkets ought to incorporate some of these savings choices in their stores – and have the right packings on shelves at the right times of the month as well. How else can they protect trips?