retail

Deloitte: Consumers Sweating Gas, Food Prices

by Sarah Mahoney , April 12, 2011

PumpingGas

The recession may be over, but the majority of consumers -- 52% -- say it doesn't feel that way, according to Deloitte's latest consumer survey. And they're worried about rough seas ahead, too, with 71% anticipating that higher gas prices will affect their ability to spend in the coming months.

"This is a very deliberate, calculating consumer," Ellen Basilico, a partner in Deloitte's retail practice, tells Marketing Daily. " And they are still focused on building their balance sheet. For example, of the 59% who expected to get a refund, 46% said they planned to pay bills and credit cards. As they're getting cash, their first inclination isn't to spend it."

Inflation is definitely on their radar, says the San Francisco-based expert. In addition to concerns about energy prices, 47% are worried about higher medical costs. And -- in a key finding for stores -- while they've been checking out new merchandise, 53% say products seem pricier. Just 27% of consumers say stores are offering more value for their money, down from 45% who said so at this time last year. And 54% say stores seem to have less sales help on hand. "They're watchful of inflation, and keeping a close eye on prices," she says.

More evidence of their renewed focus is that 60% say they are shopping online to find the best product or price, including 56% of those who are 45 and older. "It's about 64% for those younger than 45," she says, "so we are seeing that belt between the two age groups get tighter all the time."

But there are still considerable tech differences among age groups. While 31% of consumers under the age of 45 expect retailers to provide access to information through applications, social media, or mobile alerts, just 17% of older shoppers do.

Overall, 43% of shoppers with smartphones have used them to search for something while inside a store.

There are also big differences based on income levels. Those earning more than $100,000 have a "more elastic, optimistic point of view," she says, with 45% saying their confidence in the economy has improved over the past six months. Among those earning less, only 24% expressed that confidence.

The survey included 1,050 adults.

economy, energy, retail

2 comments about "Deloitte: Consumers Sweating Gas, Food Prices ".

Check to receive email when comments are posted.

Rick Monihan from None, April 12, 2011 at 10:21 a.m.
Typically, in an inflationary spiral, consumers spend their money before it becomes worth less than its current value. It's possible as inflation ticks slowly upward, that trend will begin to assert itself, but for now consumers are not reacting because of assertions that inflation is under control.
I am not so sure. In fact, I'm surprised it's taken so long for even a small amount of inflation to be become apparent, but I've realized why and it's not surprising.
First, the US is using inflation as an export tool. Since we're not likely to repeat the disasters of the 1930's with a Smoot Hawley reaction, we've moved in an alternate direction - money manipulation. The ECB tightens, so we keep the reigns loose. Foreigners won't buy our debt, so we buy it ourselves. In the current state of economic affairs, this exports massive amounts of inflation, and that is becoming apparent around the world. But it will reach us eventually.
Secondly, it's about how we discuss inflation. As long as we leave out the "CORE" figures, inflation is tame. If we include them, we can see the burgeoning dragon. And every professional knows that in the long term, as core inflation heats up, it spreads to the rest of the marketbasket. It's also quite helpful for politicians to note that the marketbasket includes lots of items people don't buy on a regular basis, such as hard goods. In fact, the two main regular purchase items ARE the core - food and energy.
Consumers aren't completely stupid. They know this intrinsically, even if they don't like talking or hearing about it. A monthly increase of 10% in food and energy costs is noticed alot more quickly than a fall in the price of a laptop or dishwasher.
In the short run, consumers are going to do the smart thing. Drive less and shop wisely. As we've seen in Britain, when faced with a similar inflationary situation, retail sales fell dramatically. This may be the trend worth studying here in the US.
Reply

Paula Lynn from Who Else Unlimited, April 13, 2011 at 9:43 a.m.

Again, it shows the population does not understand economics and how it effects their personal lives. Mr. Monihan did an excellent job, but it still may be over many people's heads (the average MediaPost reader is not the average person). The importance of people understanding ecomonics and how it effects daily life does not even mean they have to like it. But adjustments for economic stability must begin with understanding it with facts, way beyond sound bites.