Consumers Shop Less and Trade Down More

Discussion
Oct 01, 2002
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The Star Tribune of Minneapolis/St. Paul says that, “If you want to know how the troubled economy is affecting Minnesotans, look in their grocery carts.” The publication maintains that consumers are shopping less often and purchasing fewer items as concerns over the economy continue to grow.


Grocery shoppers are trading down to save money, according to John Hooley, executive vice president of Supervalu. “Our private label sales are up and our meat guys are telling me that the prime cuts are still selling, but that they’re seeing a pick up in [bulk] ground beef. It’s not a dramatic shift we’re seeing yet, but it’s enough to be noticeable. People are still coming in . . . but the average sale per customer is down.”


The latest economic activity report from the U.S. Commerce Department supports Mr. Hooley. Monday’s consumer spending report showed only a 0.3 percent increase. This tracked below the 0.5 percent increase that economists were expecting.


Moderator’s Comment: Should retailers and CPG companies
cut back or increase marketing efforts during periods of sluggish economic activity?


History has demonstrated that staying aggressive with
marketing during periods of recession pays off. Those businesses that try to
save their way out of recessions usually do not fare as well over the long haul.
[George
Anderson – Moderator
]

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