Home Graphic designer Rising food prices are forcing customers to buy less, change brands and change stores

Rising food prices are forcing customers to buy less, change brands and change stores

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By Nathaniel Meyersohn, CNN Business

Morgan Moore’s grocery bills are sky-high. So she started to stay away from big name brands and buy more Great Value private label products from Walmart.

The freelance designer from Gilmer, TX wanted to buy bacon on a recent trip, but “just walked away” because it was too expensive. Bacon prices rose 2.3% in November from the previous month and jumped 17.8% annually.

Moore also began shopping more frequently at Dollar General for staples, dairy, and eggs. The prices there, she found, “are a little cheaper, but still not as low as I would like.”

Rising grocery prices put pressure on many Americans grocery budgets, forcing them to change the way they buy food and essentials.

Food prices were 6.4% higher last month than a year ago, the fastest rate of food inflation in over a decade. Some shoppers respond by reducing the number of products they buy in-store and reducing them to cheaper private labels. according to companies, market data, public surveys and customer interviews. Others are turning to cheaper stores.

“It’s a little tight,” said Matt Larson, a teacher in Salt Lake City, Utah, who shops for his wife and their four children at Kroger and Costco.

The family’s budget has benefited from a little respite thanks to the expanded federal child tax credit and free school lunches for children, he said. But Larson buys ground beef about once a month, instead of every week, and buys less milk.

Ground beef prices rose 0.9% in November from the previous month and 13.9% annually, while milk prices rose 0.9% in November and 4.5% per year. year.

“It’s hard to spend that much on beef,” Larson said.

The family keep extra beans, wheat, flour and other shelf life items in the basement, and they look to this safety stock to help out. the highest inflation rate in nearly 40 years.

“We rely on what we have and don’t go out to buy more,” he said.

Buy cheaper food

Buyers feel the pain at the checkout, and they say they’re not going to take it much longer.

A survey in late September of more than 14,000 consumers according to market research term Numerator found that 20% said they would switch to cheaper brands if prices continued to rise. Seventeen percent said they would change retailers and 10% said they would buy less frequently. Eleven percent of shoppers surveyed said they would not change their buying habits.

Sales volume in 78% of the top 100 food categories declined in the four weeks ending November 28 compared to the same period a year ago, according to data from IRI outlets in major supermarkets , big box stores, wholesale clubs and other purchasing channels. Higher prices tend to lead to lower sales volume – the number of products sold.

Breakfast meats, milk, eggs, cereals, ice cream, fresh breads, seafood and wine suffered the largest volume drops each year.

Although many consumers have benefited from salary increase, rounds of federal stimulus measures during the pandemic, and expanded food voucher and children’s tax credits, there are signs that rising prices are changing their buying habits.

“We have seen some resistance” from customers to prices for premium cuts of meat, Sprouts Farmers Market CEO Jack Sinclair said on a conference call with an analyst last month. “We have seen price drops” on protein.

Switch to discount stores

In the past, customers have responded to higher prices or more difficult economic conditions by buying fewer ready meals and desserts, stocking up early in the month, and buying more from discount chains, said KK Davey, President of Strategic Analysis at IRI.

Executives at discount grocery stores such as Walmart, Dollar General, Dollar Tree, Grocery Outlet, Costco and BJ’s Wholesale Club have said in recent weeks that customers are noticing rising prices and changing their buying behavior. These companies say they are well positioned to attract price-sensitive customers looking to stretch their budgets.

This level of inflation “helps us a bit because of the value proposition we have,” Costco CFO Richard Galanti said on a conference call with an analyst last week.

Customers “smell inflation,” Dollar Tree CEO Michael Witynski said on a conference call with an analyst last month. “I think right now, more than ever, they’re going to be building on great value.”

Tops Markets, a northeast regional supermarket chain, expects shoppers to look for more bargains as food manufacturers increase prices in January 2022.

Rising costs and supply constraints “will impact the way consumers buy and select,” said Kristen Hanson, vice president of center store merchandise, private labels and pharmacy, in an email. “We would suspect switching to cheaper items,” many of which will be Tops private labels.

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