These are some of the ways inflation is changing Americans’ spending habits

With inflation near a four-decade high, American shoppers are watching their pennies and adjusting their spending habits — and the businesses that serve them are taking notice.

The cost shift is affecting retailers across the country, from giants like Walmart to neighborhood supermarkets, as they look for ways to deliver more affordable items to their shoppers.

Here are four examples of what companies across America are seeing and how they are adapting to the new shopping reality.

A family supermarket offering petrol promotions

Tom Charley’s family has been a grocer in the Pittsburgh area for four generations, experiencing many economic ups and downs. Even his father, who managed the stores during high inflation of the 1970s and 80s never seen such a period.

“It’s definitely a challenge. There is no doubt about it,” says Tom Charlie.

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.

“Today, we’re more focused than ever on price and getting the things people care about at the best price,” says Charlie.

That means beating around the bush to lower prices on everything from bananas to the plastic wrap used to wrap ready-to-eat food. Even though shoppers are trying to save money, Charlie says they still want the ease that comes with pre-chopped vegetables or market-prepared kebabs.

“Convenience is king,” says Charlie. “They want it more and more every day.”

This is labor intensive for supermarkets that employ more than 200 people. But they still have to be competitive, especially now food prices are rising at a double-digit annual rate.

“We never said we were going to be the cheapest,” says Charlie. “And we never said we’d be in a Whole Foods market, either.”

Charley’s Supermarkets get a lot of mileage out of offering gas station discounts through a promotional tie-up with Sunoco. Customers save 10 cents per gallon on gas for every $50 they spend on groceries.

“Our customers love this promotion,” says Charlie. “Everyone I know that shops in my store uses it.”

Cheaper trains and hunting for used models

Smoke Stack, a hobby store in Lancaster, Ohio, sells model trains, radio-controlled cars and model airplanes. Sales soared at the start of the pandemic, when many people were looking for ways to entertain themselves at home. But some of the more sophisticated model kits, starting at $70, are now out of reach for some customers.

“Once you hit 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 stocks more mid-priced models that sell for around $35. And an increasing share of her sales now come from second-hand items that another fan has sold or traded.

“We acquire a lot of collections so people can buy a model kit or some rolling stock for their model train at a fraction of the cost of new,” says Riordan. “And it’s been a big boost for people this year.”

Riordan says that while finding and appraising used items for the hobby is a lot of work, it’s nice to see old wagons or other items find new owners.

“It’s a good way to recycle these things,” says Riordan. “It really makes it much more flexible to keep the store running. And that, I think, gives us the strength to get through some of these things.”

Ice cream in 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, tre leche and tequila.

“Our whole mission is to make people happy by sharing a part of our Mexican culture,” he says.

This summer, Garcia noticed that some customers at his SolDias stores were cutting back on their orders, perhaps buying just one item instead of two. The average transaction dropped from $13.50 to about $12.25.

“That was the first indicator that maybe a recession was coming,” says Garcia. “And we have to be a little more flexible with budget-conscious consumers.”

Garcia started offering smaller portions at lower prices. He is also looking for cheaper paper suppliers and is exploring whether he can cut costs by moving more of the ice cream manufacturing process in-house.

“At the end of the day, we don’t want customers to say, ‘This place is out of our budget,'” Garcia said. “It’s up to us as companies to really listen and shift our focus to give customers the experience they want.”

More hot dog sales, fewer deli meats at Walmart

This is reported by Walmart a drop in quarterly profit last week, saying cash-strapped shoppers were trading down and filling their baskets with less expensive items as they became more sensitive to rising food prices.

“As an example, instead of higher-priced deli meats, customers are increasing their purchases of hot dogs and canned tuna or chicken,” says CFO John David Rainey.

Underserved shoppers are also choosing more private label products over branded products. And in some cases, they have to make do with smaller packet sizes.

Walmart says back-to-school sales have been strong so far. But customers are wary of spending outside the grocery aisle. This has forced the retailer to offer deep discounts on other items as it tries to offload unwanted stock.

At the same time, Walmart says it’s seeing increased traffic from high-income shoppers who turn to the discount chain in search of bargains.

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