Cost-Conscious Shoppers Should Expect These Changes at Stores
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Here's your Money Briefing for Wednesday, August 3rd. I'm J.R. Whelan for The Wall Street Journal. Consumers have had to make tough choices while drawing up their shopping lists over the past year, as inflation escalated to levels not seen in decades. But as the economy looks poised to enter a downturn, companies are revising their playbook to reach consumers who are likely to become even more cost-conscious.
So people stockpile things during the pandemic. You know, now they're drawing down on some of those supplies so they don't necessarily have to spend afresh. Companies also tend to see consumers reaching for more value-driven products.
Sabra Chaudhary covers the retail and consumer goods sectors for The Wall Street Journal. Coming up, she'll discuss changes consumers should expect to see on store shelves and how they can become smarter shoppers. That's after the break.
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How are retailers and consumer-goods makers preparing for more cost-conscious shoppers?
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Inflation has been chipping away at consumer confidence and spending power for months. And as the specter of a broader economic downturn becomes more likely, consumer goods companies that produce everything from snacks to deodorant to diapers are figuring out how they'll connect with already cost-conscious consumers who are likely to tighten their belts even more. WSJ reporter Sabra Chaudhry has been looking into this, and she's with us to talk about it. Hey Sabra, thank you so much for being with us.
Of course. Thanks for having me.
So Sabra, can you just give us some perspective here? How do consumer shopping habits typically change during economic downturns?
So I think the most standard behavior is everybody becomes much more cost conscious. People start sort of examining prices on shelves, you know, making fewer impulse purchases, just thinking more carefully about what it is that they're buying. We also see store brands or private label brands typically get a boost because it's an easy trade off. You swap your dog food or maybe your toilet paper. depending on who you are. There's also a more interesting effect, which is consumers that may be cutting back on out-of-home purchases. So say you were going to the salon before the downturn hit, you might want to do that treatment for yourself at home. So you say consumer behaviors sort of shift in terms of just like spending more time at home as well.
Now, big companies that produce household products have been tracking consumer habits as inflation has eaten away at spending power. What are they noticing?
So Procter & Gamble reported results a couple of days ago, and they said that consumers have actually been going through stockpiles. So people stockpile things during the pandemic. Now they're drawing down on some of those supplies, so they don't necessarily have to spend afresh. Companies also tend to see consumers reaching for more value driven products. So for instance, places like Costco that sell really big sizes, you know, those on a per ounce basis happen to sort of give people more value, you tend to see sales of that sort of thing go up.
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