Consumer Choices & the Economy

Got this bit of research in my email this morning:

Friday, June 27, 2008

Half of Low Income Consumers Having Trouble Buying Groceries

According to a study from Information Resources, Inc., the lagging economy is driving a dramatic move back to basics and a reversal of decades-long trends for convenient and healthier foods. Roughly half of all consumers with incomes less than $55,000 per year say they have trouble affording the groceries they need, while nearly a quarter of those earning between $55,000 and $99,000 also say so. Among those with incomes over $100,000, 16% report having trouble. 42% of consumers say they have given up favorite food brands because of rising prices and economic concerns.

The "IRI Times & Trends Special Report: Competing in a Transforming Economy" report finds that escalating prices have bred high price sensitivity, driving declining demand across multiple categories, growth in private label, trial of lower-priced brands and accelerated channel migration.

Though changes in shopping and purchase behavior vary based on life stage and presence of children, those with lower-incomes report being the hardest hit.

Consumers Having Difficulty Buying Needed Groceries
Income Segment	% Having Difficulty
< $35K	56%
$35K-54.9K	44
$55K-99.9K	24
$100K +	16%
Source: IRI Economic Trend Database/AttitudeLink, May 2008

Consumers are increasing purchases of basic ingredients and meal components, reducing restaurant spending and decreasing purchases of "non-essentials":

Consumers Making Food & Grocery Trade-Offs (Previous 6 Months)
		% By Annual Income Level ($x000)
Change	% of Total Consumers	<$35	$35-54.9	55-99.9	100+
Buy fewer individual serving pkgs.	59%	62%	68%	60%	45%
Cut back non-essential groceries	66	75	76	65	42
Buy fewer prepared meals	55	63	59	53	39
Try lower priced brands	50	62	55	46	35
Buy smaller quantities of favorite treats	55	69	58	54	34
Buy fewer organic products	52	59	56	53	34
Buy more private label	50	58	58	47	31
Give up favorite brands	42	58	52	38	19
Buy fewer "healthy" products	32	45	42	28	11
Buy fresh produce	30	46	33	27	10
Source: IRI Economic Trend Database/AttitudeLink, May 2008

Additionally:

• 53% of consumers report that they are cooking from scratch more now than they were six months ago
• Stores are seeing a resurgence in sales of frozen foods, perishables, and "center-store" items

Please access more information through IRI here, or Marketing Charts here.

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