Consumer sentiment has been all over the place in 2020 amid the ongoing COVID-19 pandemic, but the key concern among a growing number of consumers is shifting from their health toward the rising cost of food and consumables.
Dunnhumby’s latest consumer sentiment survey released Oct. 26 found shoppers are gravitating to supermarkets where they can find the best prices. This favors Walmart, Aldi, Kroger and other discounters.
Economists say consumers continue to struggle with finances as many were asked to take furloughs or pay cuts and federal stimulus for the unemployed dried up in August. Walmart President and CEO Doug McMillon recently called on Congress to act and provide aid to small businesses and sectors of the economy that continue to bleed losses. During a virtual appearance on CNBC, McMillon said Congress should keep in mind there are Americans that need them. He said the help is needed now and should take priority over politics and the upcoming election. McMillon said some families are struggling without a paycheck.
However, U.S. Senate Leader Mitch McConnell, R-Ky., has adjourned the Senate and said the body would not convene until after the Nov. 3 general election.
The Dunnhumby Consumer Pulse Survey found that 49% of U.S. consumers surveyed reported that their personal finances were poor, an increase of nearly 20% since July. In addition, 68% reported that the economy wasn’t doing well and 91% said they are closely watching store prices.
The survey asked respondents which grocery retailer in their area provides the best value. The survey found 34% cited Walmart, 12% said Aldi, and Kroger garnered 9% of the responses. Other behaviors noted in the survey include customers are fighting price hikes by shopping at stores where prices are low and searching for deals. As a result of rising prices, 58% of those surveyed are now shopping where regular prices are low, 43% are buying the lowest priced products, 36% are using coupons, 34% are searching online for best sales, and 21% are buying more private brand items.
“Since the pandemic first hit, we have been analyzing and studying consumer reactions to the virus, how it impacted their shopping behavior, and how they in turn reacted to retailers’ actions to combat the virus. Seven months after shutdowns, we are now seeing a major pivot with consumer focus turning away from the virus itself to now being more concerned with increasing food prices while the economy and their personal finances are deteriorating,” said Jose Gomes, president of North America for Dunnhumby. “Retailers need to take note that most shoppers right now are on the hunt for more value by shopping at stores with regularly low prices, while also seeking discounts and promotions.”
The U.S. Department of Agriculture reports food prices were up 4.1% in September from the prior year. Beef prices were up 10%, and fresh fruit prices were up 1.5% last month.
Nielsen reports 31.4% of grocery store items are usually purchased on some sort of sale, but at the end of September, the share was 26%. The biggest impact was in the household care department, where just 15% of items were sold on promotion, half the usual amount. Heightened consumer demand and strained supply are giving stores little reason to mark down prices, Nielsen said.
The Food Industry Association reports COVID-19 has raised food prices as supply chains were disrupted earlier and have not yet caught up in many food categories. At the same time, grocery stores and retailers’ operating costs have risen between 7% and 10% because of pandemic response efforts.
Consumers were asked by Dunnhumby if they supported retailers’ efforts around COVID-19 prevention. While a majority did applaud sanitization efforts they do not support higher food and consumable prices.
LendingTree reported earlier this month that Americans’ average weekly grocery spending had risen from $163 pre-pandemic to $190, an increase of 17%. Nearly one-third of respondents surveyed by LendingTree said they “almost always” overspend at the grocery store. Roughly 40% of respondents reported visiting grocery stores less often than before the pandemic and buying more online, and 53% said they go to multiple stores per shopping trip looking for low prices and promotions.