OPEC's Loss Is Grocers’ Gain

Groceries are the top item on which US consumers are spending their savings from lower gas prices, ahead of putting the money in savings, holiday gift-buying, and paying off credit cards, according to research from retail analytics firm Precima, Retailer Daily reports.

Of the 3,013 consumers who were asked to choose from a list of ways they use money saved on gas, 48% said they’re spending it on groceries, followed by saving (42%), holiday gift-buying (37%), paying off credit cards (30%), entertainment (10%), and other (14%).

Since mid-July, when the pump price of gasoline hit a record high over $4 a gallon, prices have dropped 57%.

The gas-to-groceries switch is even higher in certain key sectors. Among those survey respondents who said they’ve suffered a direct financial loss during the recession, 55% said they’re spending gas savings on groceries, and for those whose annual income is under $35,000, the proportion is 59%.

Conversely, 34% of retirees said they’re spending gas savings on groceries. The number fell to 29% for those whose annual income exceeds $100,000.

Recession’s Impact

Nearly two-thirds of respondents said the recession is changing the way they plan their grocery trips, particularly in regards to pantry-loading. Fully 27% of consumers said they can no longer afford to stock up on food and now buy only what they need week to week. Another 35% said they stock up more than they used to, but only when items are on sale.

Of the 65% of respondents who said their stocking habits have changed, 5% said they stock up more, 54% said they stock up only when items are on sale, and 41% no longer stock up at all.

“Given the importance of winning the stock-up 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 of Precima.

Grocery Store Choice

Survey takers were asked about the factors that drive their choice of grocery stores. When queried about the grocery category most likely to make them switch supermarkets to get a better price…

• 76% said fresh produce
• 72% said meat and seafood
• 71% said dairy

The other switch-store choices included paper products (62%), canned foods (55%), snacks-beverage-candy (53%), convenience foods (41%), deli (39%) and baby products (15%).

About the findings: Precima, a LoyaltyOne company, commissioned the Nov. 28-Dec. 8 online survey of 45,000 households, which was conducted by ICOM Information & Communications. The survey is compiled from 3,013 respondents, 2,862 of which are drivers. Respondents are nationally representative of US grocery shoppers.

Comments

[Walt17]

Interesting data but I really don't see grocery stores making a significant and sustained run up. Quite simply, people aren't going to eat more. During recessionary times there will be a tendency to switch to lower priced foods. Such as hamburger instead of a high quality steak. (Or maybe bean and rice, my favorite.) Which will decrease grocery margins.

Any increase in grocery customers is going to come at the expense of restaurants. I suspect much, possibly most, of that has already occurred. Also, as they have sales trying to win customers from the competition, the lowered prices reduce the effectiveness of those gains.

Grocers do make good trading stocks though. Some of my best gains in 2008 came from swing trading KR. But unless your goal is to beat the S&P500, don't hold them.

2009 Jan 04 06:46 PM

[notsosmart]

same ole dumb-dumbs.dont spend-save.pay off all you can.dont buy.you have enough stuff.pocket your interest instead of giving it to the scoundrels.wake up.learn.

2009 Jan 05 04:20 PM