Many Consumers are Feeling The Economic Impact of COVID-19

Idaho Falls, ID – COVID-19 has changed nearly every aspect of daily life, and that includes the way Americans shop for groceries.  For the last several weeks, the perishables industry has witnessed incredible changes in grocery shopping habits including unprecedented stock up trips that left store shelves empty, huge increases in year over year produce sales and significant shifts toward online grocery shopping.  COVID-19 has taken a heavy toll on the American consumer.  In addition to consumers’ concerns about their health and safety, many are also dealing with a decrease in their household income due to the closure of restaurants, services and other businesses deemed “non-essential.”

A recent study by Category Partners (CP) revealed that nearly half, 47%, of consumers have expereinced some type of economic loss due to the COVIC-19 pandemic, either job loss or a pay cut for themselves or their significant other.  This change in their economic situation has spurred changes in their grocery shopping behavior, resulting in more and more consumers trying to stretch their food dollars further.  

Seventy-nine percent of consumers surveyed said they are taking steps to save money on groceries, with 36% saying they are more often buying what is on sale.  Nearly the same number said they are buying value packs (35%), buying more store brand items (34%), looking for coupons and other discounts (33%) and avoiding expensive items (32%).  Additionally, nearly one-quarter have even switched stores, with 23% saying they are now shopping at lower cost stores.  

Cara Ammon, Category Partners’ Senior Vice President, Research and Market Intel, noted, “As the lockdowns continue, and the financial stress of the pandemic worsens, we think these cost-cutting behaviors will continue and even increase.  In the face of economic uncertainty, consumers will likely continue to look for ways to save money at the grocery store.”

In this study, CP polled 2,000 consumers throughout the U.S., aged 18-75+ (further demographic information below*), giving it the ability to study changes in shopping behavior across region, age and household income.

The survey revealed differences among age groups.  The economic impact of COVID-19 has disproportionately affected younger people.  Of survey respondents under age 45, 57% said they have been impacted financially.  Thirty-nine percent of that age group said they now more often buy sale items.  Similarly, 37% of younger respondents said they are switching to store brands and 33% said they are avoiding expensive items.

While the financial impact has been significantly greater for younger people, the 45+ age group has also felt the financial impact, with 36% of that age group claiming negative financial impacts.  Thirty-three percent of respondents over 45 years old said they are now more often buy sale items while 32% said they are opting for store brands.  Nearly the same number, 31%, responded that they are avoiding expensive items.

“Interestingly, as we look at the relative size of negative financial impacts between the age groups, even though a greater proportion of younger consumers have felt the hurt, it is older consumers who are modifying their purchase behavior on a greater scale,” commented Ammon.  She went on to add, “We were also able to observe some regional variation in the responses.  For example, consumers in the Midwest are more likely to look for sales and consumers in the South are more likely to switch to store brands as cost cutting measures.”

Ammon concluded her comments by adding, “The data indicate that lower income consumers (under $50,000 annual household income) exhibit a willingness to shop at retailers they perceive are lower cost.  As consumer income increases, consumers may remain more loyal to their retailer but are still looking for deals in the way of sales, coupons and store brand options.  It goes without saying, many people are hurting.  Producers and retailers can help.  Understanding what and how their customers are shopping and responding can go a long way toward being good neighbors in this crazy time.”

*HH income between <$25,000 and >$200,000, encompassing various ethnicities and nearly evenly split between female/male, release date April 20, 2020.

About Category Partners – a nationally recognized resource, among food companies and retailers, for delivering actionable business/consumer insights, marketing/sales plans and technology/data solutions. Category Partners is producer owned and headquartered in Idaho Falls, ID, with offices in Laguna Hills, Calif., Chicago, and Wenatchee, Wash.