With inflation near a four-decade high, American shoppers are watching their pennies and adjusting their spending habits – and the businesses that cater to them are taking notice.
The change in spending is affecting retailers across the country, from giants like Walmart to the neighborhood supermarket, as they look for ways to deliver more affordable products to their customers.
Here are four examples of what businesses across America are seeing, and how they are adjusting to the new shopping reality.
The family supermarket that’s offering gas promotions
Tom Charley’s family has been selling groceries in the Pittsburgh area for four generations, through lots of economic ups and downs. Even his father, who ran stores during the high inflation of the 1970s and ’80s has never seen a period quite like this.
“It’s a challenge, for sure. There’s no doubt about it,” Tom Charley says.
The three Charley Family Shop N Save markets have long prided themselves on high-quality service, with in-store butchers and bakeries. But today, the company’s newspaper ads are more likely to highlight discounts on yogurt than premium, hand-cut steaks.
“We are as focused today as we’ve ever been on price and making sure we can get items that people care about at the best price possible,” Charley says.
That means beating the bushes for lower prices on everything from bananas to the plastic wrap used to package prepared foods. Even as shoppers are trying to save money, Charley says, they still want the ease that comes with pre-cut vegetables or market-crafted kebabs.
“Convenience is king,” Charley says. “They want it more and more every day.”
That’s labor intensive for the supermarkets, which employ more than 200 people. But they still have to be cost competitive, especially now, when grocery prices have been climbing at a double-digit annual rate.
“We’ve never said we’re going to be the cheapest,” Charley says. “And we’ve also never said we’re going to be the Whole Foods of the market.”
Charley’s supermarkets get a lot of mileage from offering a discount at the gas station through a promotional tie-in with Sunoco. Customers save 10 cents a gallon on gasoline for every $50 they spend on groceries.
“Our customers love that promotion,” Charley says. “Everyone I know that shops in my store uses it.”
Cheaper train sets and hunting for used models
The Smoke Stack Hobby Shop in Lancaster, Ohio, sells train sets, radio-controlled cars and model airplanes. Sales boomed early in the pandemic when many people were looking for ways to entertain themselves at home. But some of the most elaborate model kits, priced at $70 or more, are now out of reach for some customers.
“Once you hit past the $50 mark, somebody has to think long and hard about buying a kit like that,” says Patti Riordan, who runs the store with her husband, Don. “So we’re still going to get some of those high-end ones, but it’s definitely going to be a lot less.”
Instead, Riordan is stocking more mid-priced models, which sell for around $35. And a growing share of her sales now comes from used items that another hobbyist has sold or traded in.
“We buy a lot of collections so people can buy a model kit or some rolling stock for their train layout at a fraction of the cost of new,” Riordan says. “And that’s been a big sustainer for folks this year.”
Riordan says while finding and pricing used hobby items is a lot of work, it’s gratifying when old railroad cars or other items find new owners.
“It’s a nice way to recycle that stuff,” Riordan says. “It really allows a lot more flexibility to keep the shop going. And that, I think, gives us the strength to weather through some of these things.”
Ice cream at smaller portions – and lower prices
Victor Garcia runs a Mexican-style ice cream company in the Fort Worth area that specializes in flavors like mango, tres leches and tequila.
“Our whole mission is to make people happy by sharing a piece of our Mexican culture,” he says.
This summer, Garcia noticed some customers at his SolDias stores were downsizing their orders, perhaps buying just one item instead of two. The average transaction dropped from $13.50 to about $12.25.
“That kind of was the first indicator that maybe a recession is coming,” Garcia says. “And we do have to be a little more flexible with our budget-conscious consumers.”
Garcia has started offering smaller portion sizes at lower prices. He’s also hunting for cheaper paper suppliers and exploring whether he could cut costs by moving more of the ice cream manufacturing process in-house.
“At the end of the day, what we don’t want is customers saying, ‘That place is outside of our budget,'” Garcia said. “It’s up to us as the businesses to really listen and pivot and give the customer the experience they want.”
More hot dog sales, fewer deli meats at Walmart
Walmart reported a drop in quarterly earnings this past week, saying cash-strapped shoppers have been trading down and filling their shopping carts with less expensive items as they’ve grown more sensitive to rising food prices.
“As an example, instead of deli meats at higher price points, customers are increasing purchases of hot dogs as well as canned tuna or chicken,” says chief financial officer John David Rainey.
Cash-strapped shoppers are also opting for more private-label products, rather than brand-named goods. And in some cases they’re having to get by with smaller package sizes.
Walmart says so far, back-to-school sales have been strong. But customers are wary about spending outside the grocery aisle. That’s forced the retailer to offer deeper discounts on other merchandise as it tries to unload unwanted inventory.
At the same time, Walmart says it’s seeing increased traffic from upper-income shoppers, who are turning to the discount chain in search of bargains.