Grocery Sees Strong Summer Sales
A week after the latest government data showed that overall inflation dipped for the first time since the height of the pandemic and grocery inflation held mostly steady, the U.S. Census Bureau affirmed that the economic climate for businesses is relatively stable. According to the agency’s monthly report, advance retail and food services sales in the United States ticked up less than half a percent from May to June and are 2.3% higher than June 2023.
While sales at fuel stations and car dealerships dipped in June, the grocery sector had a respectable month. Grocery sales were up 1.7% on a year-over-year (YoY) in June, the highest rate in the last three months. Supermarket sales topped $73.9 billion last month on an adjusted basis, a hair more than the $73.8 billion figure for May and down only slightly from $74.0 billion mark in April.
Sales at general merchandise stores were similarly stable, coming in at $75.6 billion in June compared to $75.2 billion in May. Meanwhile, the Census Bureau reports that sales at food service and drinking places are likewise fairly even: those establishments rang up $94.8 billion last month versus $94.5 billion the prior month.
One analyst told the Reuters news service that the data reflects a consumer base that remains both cautious and resilient. "The economy is in pretty good shape, there are signs of softness around the edges where low and moderate income consumers are pulling back ... but openhanded spending by affluent consumers is keeping the economy as a whole moving forward," observed Bill Adams, chief economist at Comerica Bank.
Other research centered on food and beverage categories affirms that the overall operating environment is better, or at least not worse. According to June performance reports shared by Anne-Marie Roerink of 210 Analytics, most grocery departments experienced growth three out of the four weeks in June and that last week was affected by the timing of the Fourth of July holiday. “Unlike last year when shoppers could use their weekend stock up trip to cover the holiday, this year more people shopped mid-week for the holiday, which pushed sales into July and next month’s report,” Roerink pointed out.
The meat department had a solid month, she noted, citing Circana data showing fresh meat sales climbed 3.7% in June. Just like June is a top grilling month, the opening weeks of summer are also ripe for fresh and in-season produce sales, “Fruit had a monster month with melons, mandarins and grapes adding significant new dollars,” Roerink said, adding that seasonal staples like tomatoes, lettuce and potatoes fared well in sales, per Circana’s information.
Still, even with research underscoring consumers’ willingness to spend, there is still a buzz about inflation and a new frugality that seems to be defining this decade. Last week, for example, PepsiCo Chairman and CEO Ramon L. Laguarta said during a second quarter earnings call that inflation is still influencing the industry and consumers.
“I know that for many categories, the multiple year inflation that we had to take, because our input cost went up, has created some perception and some reality in a lot of households that food is expensive and consumers are making choices,” he said. “And they can make choices to cook versus buying finished goods or finished products or they can make a lot of decisions around how they spend their money and how they feed themselves every day with the lowest budget. And I think that's the fundamental question to address for the food companies. Now that our costs are kind of normalizing, our input costs, and we've all been going at productivity, in our case, this has been a very, very strategic focus for us. Now, how do we deploy those resources against what are the best levers to reignite growth?” PepsiCo’s approach, he added, is not a blanket one.
