Holiday Season Will Put Pressure on Consumers’ Grocery Budgets

During seasons of high spending, such as over the holidays, many consumers are forced to cut back on basic needs such as food and beverages, PYMNTS Intelligence revealed.

By the Numbers

For the latest installment of “New Reality Check: The Paycheck-to-Paycheck Report,” a PYMNTS and LendingClub collaboration, “The Seasonal Financial Distress Deep Dive Edition,” more than 4,200 consumers were surveyed in August about how seasonal spending impacts their ability to manage expenses and accumulate savings.

The results showed that to cope with seasonal financial distress, 40% of consumers reported that they spend less on their basic needs. The same study found that consumers most commonly experience such pressures during the holiday season — November and December.

The Data in Context

At this point, grocers have seen their fair share of consumer cutbacks. The period of inflation seen throughout the past couple of years had consumers trading down to less expensive merchants and brands and cutting back on nonessential purchases.

“Typically, during a more challenged economic environment, … we do see more customers engage with Our Brands products, and as they start to see the quality and the value, often we find there’s a higher penetration level that occurs during that time,” Kroger Chief Financial Officer Gary Millerchip told analysts on a June earnings call. “And typically, it stays at a more elevated level even after the economic challenges have dissipated.”

Meanwhile, Walmart, the world’s largest grocer, saw gains in recent years as high-income consumers traded down from pricier merchants. CEO Doug McMillon said on a call with analysts this past spring that the company continues “to gain market share in the grocery category, including with higher income and younger shoppers.”

Plus, last holiday season, grocery technology company Ocado Group and British retailer Marks & Spencer, noted that average basket value was down 1.3% year over year, with the number of items per basket declining.