NPD: Consumers Still Economizing On Food

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Still quite wary about what lies ahead, people say that when it comes to spending on food and beverages, they are planning to continue to practice thriftiness for at least the next 6 to 12 months, according to new research from NPD.

In fact, 9 of 10 consumers reported that they plan to continue to watch their spending on food and beverages (both retail and restaurant) in the months ahead, and nearly one in five specifically said they will decrease their grocery spending over the next six months, NPD reports in "What's Next on the Road to Recovery."

The reason: Nearly one in five expect to be worse off in 12 months than they are today, while nearly half expect no change in their financial situation. Just 30% of households expect to be better off a year from now.

The findings seem to confirm that there is indeed a recession-created "new normal" consumer mentality about spending, even when it comes to groceries and other essentials.

"Some have suggested that we're entering an 'Age of Thriftiness,'" notes Dori Hickey, director of product development for NPD and the report's author. "While only time will tell, it's clear that consumer confidence remains low, and that the longer the recession continues, the greater the chance that the newly adopted behaviors will become entrenched, as consumers become accustomed to and comfortable with making concessions and getting by with less. While there are encouraging signs for economic recovery, consumers with lower incomes, in particular, clearly continue to struggle."

Asked about their spending habits during the past year, the #1 cutback cited (63%) was restaurant patronage. However, reducing grocery spending ranked fifth, cited by 40%.

Looking forward, people were asked how they think their grocery buying and other spending habits will be different six months from now, including what money-saving behaviors they expect to be engaging in more often than they do currently.

Nearly one-third (31%) said they will be using more coupons from magazines and newspapers; 28% said that they will be stocking up more on food/beverages when they are on sale; 27% said they'll be doing more searching of store circulars to find low prices on food/ beverages; 24% said they will be buying less expensive brands; and nearly 24% said they will be doing more searching for online coupons.

Not surprisingly, the people hardest-hit by the recession -- those with household incomes under $35,000 -- were even more inclined than consumers as a whole to indicate that they will be decreasing spending on groceries over the next six months.

Regional differences, largely reflecting unemployment rates, are also clear. In East South Central states and in Western mountain region states, 53% and 46%, respectively, said they expect to be worse off in 12 months -- compared to 39% of consumers overall who expect to be worse off a year from now. Looking back over the past 12 months, just 14% overall said they feel their financial situation has improved, but that perception was somewhat more prevalent (18%) among those in the West South Central states.

Of course, expressed attitudes and perceptions do not always mesh with actual behaviors, notes Hickey.

When NPD's ongoing tracking of daily behavior (via consumer diaries) through its National Eating Trends research is compared with attitudes reported in this new recession-focused research, it's clear that people have indeed been cutting back on restaurant spending and buying more private-label groceries, she says. But while people say they are "brown bagging" meals more often and eating more leftovers, behavioral data show brown-bagging flat and leftover consumption actually having decreased during the past year.

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