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Rising Food Prices and Economic Uncertainty Take Toll on Traditional

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Rising Food Prices and Economic Uncertainty Take Toll on Traditional DIET AND HEALTH FINDINGS As prices for many food staples rose sharply in 2007 and 2008, consumers searched for new ways to reduce grocery spending. Price- oriented, limited-assortment supermarkets like Aldi and Sav-A-Lot saw gains in total sales (in- cluding nonfood sales) of 16.2 percent in 2007, up from an 8.3-percent gain in 2006, according to Willard Bishop Consulting. Similarly, super- warehouse supermarkets, such as Cub Foods, Food 4 Less, and Winco Foods, increased their total sales by 14.1 percent in 2007, up from a 2.2-percent decline in the prior year. A super- warehouse supermarket, is a hybrid of a large supermarket and a no-frills warehouse store. Phil Kaufman, USDA/ERS Meanwhile, sales by all supermarkets were up ISSUE 2 • only 3.0 percent in 2007. Rising Food Prices and Economic Uncertainty Bargain food shoppers also sought out no- frills, deep-discount retailers that sell branded Take Toll on Traditional Grocers food manufacturers’ surplus goods, inventory overstock, and reclaimed goods from other re- VOLUME 7 Faced with tough economic times, many sales declined, while the food sales of stores tailers. Still other stores specialize in “salvaged” consumers are looking to stretch their budgets. promoting low prices and good-value foods 6 or damaged products, such as dented cans from Much of a family’s monthly budget—like rent jumped. Between 2001 and 2008, supermar- large, brand-name food manufacturers. Food or mortgage payments, utility costs, and car kets’ share of total retail food sales fell from sales by stores selling surplus, overstocked, payments—is relatively fi xed. Food-at-home 62.8 to 57.8 percent. Over the same period, or damaged products are a small percentage of spending—at $417 per month in 2007 for an nontraditional grocers, such as warehouse club U.S. retail food sales, but they play a growing average family of four—is one budget item stores and supercenters, increased their sales role in stretching some consumers’ food dol- where families can take steps to economize. share from 11.7 to 18.1 percent. The appeal of lars. Amelia’s Grocery Outlet, a salvage food AMBER WAVES AMBER The growth of discount retailers has pro- low prices and the convenience of one-stop chain in Southeastern Pennsylvania, reported vided consumers with more options to cut shopping fueled the growth of food sales by a 25-percent increase in sales in 2008, up from monthly food spending. After a short recession supercenters and warehouse club stores. a 17-percent gain in 2007. in 2001, supermarkets’ share of retail food Although at-home food prices are Share of food sales by nontraditional retailers is rising expected to moderate in 2009 from their 6.4-percent increase in 2008, the prospects Share of retail food sales (percent) 70 for economic uncertainty and recessionary Supermarkets (Kroger, Safeway, Aldi, Winco) conditions are likely to continue the shift in 60 food spending to discount supermarkets and 50 nontraditional stores. 40 Annette Clauson, [email protected] Phil Kaufman, [email protected] 30 Other stores selling food (Dollar General, Walgreens), and nonstore retailers Warehouse club stores and supercenters (Costco, Wal-Mart) For more information . 20 (mail order, farmer’s markets) ERS Briefi ng Room on Food CPI and 10 Other grocery stores (Trader Joe’s, Whole Foods) Expenditures, available at: www.ers.usda. 0 gov/briefi ng/cpifoodandexpenditures/ 2001 02 03 04 05 06 07 08 Source: Calculated by USDA, Economic Research Service. ECONOMIC RESEARCH SERVICE/USDA.
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