With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store — WSJ
Summary
A WSJ article by Annie Gasparro and Jaewon Kang, updated August 27, 2020, about grocery spending while second stimulus checks were on hold. The article says grocery shoppers are cutting back after the $600 in weekly additional unemployment checks expired in July, and that grocery stores are bringing back discounts. It cites IRI data showing frozen dinner sales growth averaging about 9% over three weeks, compared with 17% for the previous two weeks. It also reports that President Trump signed an executive order that would provide recipients an extra $400 a week, and that the program has run into delays because states must reconfigure their unemployment systems.
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“With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store — WSJ.”
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
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With Second Stimulus Checks on Hold,
Americans Spend Less at the Grocery Store
End to extra unemployment bene its among reasons for recent decline in food spending
By Annie Gasparro and Jaewon Kang
Updated Aug. 27, 2020 1 09 pm ET
Listen to this article
9 Minutes
Grocery shoppers are cutting back on spending, data show, a sign that Americans are
hurting for cash as the federal unemployment stimulus remains on hold for most
recipients.
The emerging shift in food spending comes after the $600 in weekly additional
unemployment checks expired in July. It has also prompted grocery stores to bring back
something customers haven’t seen much of during the pandemic: discounts.
Lump-sum stimulus checks consumers received in the spring and the extra
unemployment money for people who lost their jobs in the coronavirus pandemic have
helped shore up consumer businesses amid widespread shutdowns and millions of
workers claiming unemployment.
While consumer spending rebounded between May and July following a plunge earlier in
Tech News Briefing with Sheryl Sandberg
theInspring, analysts say that a broader pullback on grocery spending could mean lower
new episode, Sandberg discusses Facebook, the election and her political ambitions.
sales for more discretionary items such as clothes and cars.
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
Walmart Inc. WMT -2.17% ▲ executives said consumers are nervous about their finances
and job security in the absence of stimulus aid, leading to cutbacks in spending.
“People perceive they’re spending more money on food, despite eating out less,” said
Walmart U.S. Chief Executive John Furner on a conference call last week. “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.”
Other retailers, such as Stop & Shop Supermarket LLC, also expect consumer spending
growth to be tempered in the months ahead by economic uncertainty and the continued
disruption of sporting events, restaurant dining and other facets of pre-pandemic life.
Lost Appetite
Sales of some groceries fell sharply in mid-
August from a few weeks prior.
U.S. volume sales, change from week ended
July 26 vs. week ended August 16
- pct pts -
Soup
Natural
cheese
Co ee
Meat
Chocolate
candy
Yogurt
Carbonated
beverages
Bottled
water
Milk
Beer ale alcoholic
cider
Note: Includes traditional grocers, discount stores
and mass retailers, including Walmart
Source: IRI
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Gordon Reid, president
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Delhaize ADRNY -0.53% ▲ NV, said he expects price to be a challenge for consumers in the
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
last quarter of the year and into next year. While Mr. Reid hasn’t seen a direct connection
to reduced unemployment checks, he said customers have become more price-conscious.
President Trump signed an executive order earlier this month that would provide
recipients with an extra $400 a week, but the program has run into delays as it requires
states to reconfigure their unemployment systems and chip in $100 per person. So far,
three states are distributing funds.
While sales of groceries, such as frozen dinners, cereal, soup and coffee, are still higher
than they were a year ago, sales growth has slowed compared with July and prior months
in the pandemic.
Slowed Down
While still higher than a year ago, sales in
some grocery categories have slowed.
U.S. dollar sales, change from previous year*
%
Frozen
food
Total
edible†
Refrigerated
food
Beverages
- Packaged
Feb. 2020 July food
*Each date is the end of a four-week period
†Includes traditional grocers, discount stores and
mass retailers
Source: IRI
Sales growth of frozen dinners, for instance, averaged about 9% for the three weeks ended
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Demand Index. Cereal sales, meanwhile, averaged a 2% increase the three weeks ended
Aug. 16, compared with about 6% average growth the prior two weeks, the IRI data show.
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
The data includes online and in-store sales at traditional grocers, dollar stores, mass
retailers including Walmart and club stores. It doesn’t include convenience stores.
Grocery prices were broadly consistent with prior weeks, and restaurant dining held
steady during that time, the IRI analysis showed, indicating that neither was a significant
factor in the slowed grocery spending—further evidence that the halted unemployment
stimulus was a driving factor. However, restaurant-data provider Black Box Intelligence
said same-restaurant sales have declined less so far in August than in July, when
including takeout, delivery and dine-in.
Some states with higher unemployment, such as Illinois, Nevada and New York, recorded
a greater deceleration in grocery spending, according to IRI.
Checks in the Mail?
Some states with higher unemployment rates
are having faster slowdowns in grocery
spending.
U.S. dollar sales in edible groceries, change
from previous year’s same four-week period
Top three states with the...
...lowest unemployment rates
...highest unemployment rates
30%
25
20 Idaho
Nev.
15 Mass.
Neb.
10 N.Y.
Utah
5
June 2020 July
Note: Unemployment rates are preliminary July 2020
igures
Sources: IRI (dollar sales); Bureau of Labor Statistics
Tech News Briefing with Sheryl Sandberg
(unemployment rankings)
In new episode, Sandberg discusses Facebook, the election and her political ambitions.
Fewer trips to grocery stores, along with smaller receipts per visit, are typical patterns
during a recession. As consumers gravitate LISTEN
toward value, food companies and retailers
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
say they’re preparing to offer discounts that can eat into margins and intensify
competition.
Sales at the grocery store have been rare since March, but grocers are now bringing those
back, selling low-price items in bulk and revamping loyalty programs they say are aimed
at helping customers save money. Retailers and their suppliers are also selling more value
packs.
Stop & Shop said its sales growth started slowing to single digits in early June compared
with double-digits at the start of the pandemic. The Quincy, Mass.-based grocer recently
launched initiatives such as three-day sales and a new loyalty program that allows
consumers to spend points on groceries and fuel. The grocer’s advertisements of
discounts, which went down to four pages from the usual 10 pages at the start of the
pandemic, are now eight pages long, Mr. Reid said.
Associated Food Stores, a cooperative of more than 400 grocers, is now promoting more
items and offering discounted products in bulk largely for large families, said Chief
Financial Officer Bob Obray.
“There is anxiety out there” because of economic uncertainty, he said.
Midwest grocer B&R Stores Inc. started highlighting under-$1 items in its advertisements
as shoppers become more budget-focused, said President Mark Griffin, though the chain
hasn’t seen a change in sales growth.
SHARE YOUR THOUGHTS
Have you noticed a change in discounts at grocery stores near you? Join the conversation below.
The financial stress could lead to more people shopping at dollar stores, as middle-income
consumers who wouldn’t normally shop there might start to, according to Morgan Stanley
retail analyst Simeon Gutman.
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
Thursday. Dollar General said its same-store sales so far in August are up about 15%,
above analysts’ forecast of 6%.
Dollar Tree Inc. said Thursday its sales have also continued to rise this month. “With the
extra unemployment benefits going away and the unemployment rate where it is, we
believe we’re in as great a position as we were in 2008,” Chief Executive Mike Witynski
said on a conference call.
Some consumers already have started buying groceries at cheaper retailers. Jennifer
Dickerson, a 36-year-old marketing manager, started buying groceries at her local Trader
Joe’s in Studio City, Calif., and stopped shopping at Costco, COST -1.94% ▲ Target Corp.
TGT -1.18% ▲ and Kroger Co. KR -1.09% ▲ ’s Ralphs chain. Ms. Dickerson, who has two
toddlers, also price-checks everything else online so her family can save more.
“We feel like we have to be prepared for anything,” said Ms. Dickerson.
Mary Proffitt, 63, who was laid off by her restaurant employer in Kentucky at the end of
March, hasn’t received stimulus or unemployment checks since May because of a backlog
in her state. She said she cut weekly spending on groceries by half to $100, and relies on
canned and frozen vegetables. “I’ve never been this destitute before,” she said.
GROCERIES & CORONAVIRUS
•A Smart Guide to Food Shopping and Outdoor Dining
•Why Are Some Groceries Still So Hard to Find During the Pandemic?
•Grocers Embrace Food Delivery, but They Still Don’t Love It
Newly price-sensitive shoppers are buying more store-branded items, said Mike Duffy,
chief executive of C&S Wholesale Grocers Inc., a distributor to grocery chains including
Safeway and Southeastern Grocers. Private-label brand sales are outpacing national
brand sales, he added.
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9/10/2020 With Second Stimulus Checks on Hold, Americans Spend Less at the Grocery Store - WSJ
aimed at budget-conscious shoppers as they try to hold on to sales momentum they have
gained in recent months.
J.M. Smucker Co. SJM -2.35% ▲ is one of the companies that says it is holding back on deals.
Chief Executive Mark Smucker said Tuesday he hasn’t seen an impact from the halted
unemployment bonus on its brands, and demand remains too high to merit discounts on
its jams, Folgers coffee and some other brands. “We are keeping an eye on the competition
and taking it week by week,” he said.
Corrections & Amplifications
In an earlier version of the chart titled “Checks in the Mail?” the states with lowest
unemployment rates used total grocery data instead of data on edible groceries. This
chart was updated to reflect data only pertaining to edible groceries. (Corrected on Aug.
27)
Write to Annie Gasparro at annie.gasparro@wsj.com and Jaewon Kang at
jaewon.kang@wsj.com
Copyright © 2020 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit
https://www.djreprints.com.
Tech News Briefing with Sheryl Sandberg
In new episode, Sandberg discusses Facebook, the election and her political ambitions.
LISTEN NOW
https://www.wsj.com/articles/with-stimulus-checks-on-hold-americans-are-spending-less-at-the-grocery-store-11598526249 7/7
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