Grocers shift gears as stimulus stalemate tightens consumer spending
The big gains the grocery sector experienced due to the novel coronavirus pandemic might be coming to an end as a next round of government stimulus checks remain in limbo.
Grocery shoppers have been growing more frugal since the expiration of $600 additional weekly federal unemployment checks, which were a provision of the first pandemic-driven economic stimulus package, Marketwatch reported. That money had been available to people who lost their jobs due to the pandemic as an add-on to state unemployment, but the program expired in July. The enhanced unemployment, along with lump-sum stimulus payments distributed early in the pandemic, had been helping keep individuals and the economy afloat. As shoppers have begun to spend less on food, grocers have started offering more discounts.
There may be other factors influencing the reduced spending grocers are now seeing. For instance, some quick-serve restaurants, like Domino’s and Chipotle, have experienced significant rebounds in their second quarter, leading PYMNTS to speculate that people are reducing their reliance on grocery stores as they become more comfortable ordering takeout again.
Grocers were uniquely positioned early on in the pandemic to benefit from an influx of customer traffic. As stay-at-home orders and lockdowns went into effect, restaurant closures caused drastic shifts in eating habits. Grocery stores were deemed essential and experienced increased foot traffic. Those that offered curbside pickup and home delivery experienced unprecedented spikes in customers shopping via e-commerce.
There is some indication that customers have remained value-minded in their shopping habits throughout the pandemic with major dollar store chains experiencing same-store sales growth in their first quarters.
Recent data also indicates, however, that the stimulus was working to keep consumer spending up.
Data from CassarCo Strategy & Analytics released earlier this month found that the massive reduction in spending across the board in the early days of pandemic lockdowns was replaced by a huge rebound in spending that coincided with the stimulus. The increase in spending was much sharper in households with a yearly income below $50,000.
- Americans are spending less at grocery stores as second round of stimulus checks remain on hold – MarketWatch
- U.S. Grocery Sales Drop s Consumers Order Delivery – PYMNTS
- Will dollar stores be the biggest post-COVID-19 winners? – RetailWire
- Should retailers push Congress for a more robust stimulus plan? – RetailWire
DISCUSSION QUESTIONS: How do you expect grocers to adjust their merchandising and marketing practices as money becomes tighter for large numbers of American households? What do you see as the mid- and long-term impacts of pandemic-related developments on the grocery sector?