Grocery Spending in a Holding Pattern

Consumer spending on groceries remains relatively flat, according to new data from the U.S. Census Bureau. According to the agency’s advanced monthly retail sales estimates, sales at grocery stores came in at $73.4 billion in April on an adjusted basis, slightly down from $73.7 billion in March but higher than the $70.8 billion during the same time last year.  

Indeed, sales – fueled by both inflation and consumer resilience – are still up for the year to date. The Census Department data shows that grocery sales topped $285.4 billion for the first four months of 2023, a 4.8% gain over the first four months of 2022.

[Read more: “Consumers Go Out More, Buy Less”]

Chip West, a retail and consumer behavior expert at marketing solutions company Vericast, said the data shows that consumers are still spending on essentials but wary about overspending. “For the most part, consumers in April remained focused on necessities, and grocery spend remained relatively flat month over month. Elevated inflation has been a part of our lives for a good while now, and consumers have adapted: Increasingly, shoppers have acquired important skills to help them save,” he said. “Comparison shopping, homing in on private labels, better planning and seeking out coupons are all ways that consumers are making their dollars go further."

Another analyst, Piyush Patel, chief strategic business development officer at software company Algolia, pointed to some key differences as summer rolls around this year. “Typically, as the school year ends, retailers get ready for the summer travel season and expect that consumers will spend their dollars on traveling and experiences. However, consumers are aiming to be strategic and specific with their spending and will be more conservative with their money compared to previous years, as interest rates rise to control inflation,” he said.

To navigate this latest market twist, grocers can find new pockets of growth by providing discounts and executing value-centric programs. “As consumers continue learning how to adapt to higher costs and put these skills to good use, increased savings on essentials through savvy shopping may free up budgets for discretionary purchases that have been delayed – even opening up a chance to ‘splurge.’ As grocers look to capture the consumers’ selective spend, they should focus on promoting value messaging,” West pointed out.

Tweaks are also being made in the digital channel, Patel reported. “Amazon moved up its summer season Prime Day, which could be a sign that even the biggest e-commerce conglomerates are looking to switch up their strategies,” he noted.