Americans Spend Less on Groceries

With no extra unemployment benefits coming, consumers have less money to spend on food.

August 28, 2020

WASHINGTON—U.S. grocery shoppers have slashed spending as the $600 weekly stimulus unemployment benefits expired last month, the Wall Street Journal reports. Lump-sum stimulus checks this spring, coupled with the extra unemployment money, shored up consumer finances during a period of widespread unemployment.

Walmart officials said shoppers, concerned about finances, have cut spending. “People perceive they’re spending more money on food, despite eating out less,” said John Furner, CEO of Walmart U.S., during a recent conference call. “So we’ll be thoughtful about the way we plan the rest of the year and react to changes in the trends we see from our shoppers.”

The change has spurred supermarkets to bring back something shoppers haven’t seen a lot of lately—discounts. Grocery sales continue to register higher than a year earlier, but that growth has slowed compared to July and earlier during the pandemic.

Fewer grocery store trips and lower basket sizes per visit typically happen during a recession. Consumers are beginning to turn toward value, leading retailers and food manufacturers to offer discounts. Retailers and suppliers are offering more value packs, redoing loyalty programs and offering low-price items in bulk.

At c-stores, consumers have been making fewer trips, but basket spend has generally been higher, according to analysis from PDI and NACS on how COVID-19 is impacting consumer behavior.

Financial uncertainty could also drive more shoppers to dollar stores, said Simeon Gutman, a retail analyst at Morgan Stanley. Private-label brands are also selling better than national brands.