Americans are seeing the highest levels of inflation in four decades. Earnings from retailers are showing a split in shopping patterns even as prices of everything ranging from toothpaste to TVs have curbed the spending habits of US consumers.
While higher-income shoppers have, to a degree, been able to absorb inflationary shocks, lower-income consumers have been significantly hit.
Data from Dollar General show that shoppers are purchasing more food and beverages instead of apparel, home and seasonal products.
According to Rival Dollar Tree, shoppers were responding “favorably” to its lower value products which are priced at $3 to $5.
Stores under the Dollar Tree banner delivered their strongest quarter in company history. Same-store sales surged 11.2%.
Shoppers at Macy’s, which typically attracts middle- to higher-income consumers, saw shoppers spending less money on non-essentials items such as tailored suits, gowns and beauty products.
Households earning less than $75,000 yearly are “most affected” by inflation, said Macy’s CEO Jeff Gennette.
“We are taking the necessary actions now to position ourselves for accelerated growth in what I view as the most attractive sector in retail, especially in the current macro environment,” said Michael Witynski, Dollar Tree’s CEO, while adding, he was ramping up investments in labor, distribution and its supply chain.
Data from Walmart shows that shoppers were saving money by choosing more store-brand, “private-label” lunch meat, deli, bacon and dairy items, with many lower-income shoppers shifting to buying milk in half-gallon rather than full-gallon containers.