Gas prices affecting consumer spending, says study
leading large numbers of consumers to change how they shop and
spend, says a market research firm.
According to a new survey from ACNielsen, more people are combining errands, eating out less often and doing more at home.
And food makers could soon feel the pinch if consumers start buying cheaper bulk products instead of high-margin niche goods.
Certainly, things could get tighter. Todd Hale, ACNielsen senior vice president, Consumer Insights, pointed out that gas prices have gone up even further since the survey was conducted in June and July.
"With the added economic uncertainty created by the disaster in New Orleans and other parts of the Gulf Coast, you can be sure that there are even more people now looking for ways to conserve fuel and reduce overall spending," he said.
The hurricane has undoubtedly impacted on the nation's food supply and infrastructure. Just over 60 percent of corn and soybean exports originate from the New Orleans area, while over a quarter of all coffee stored in the United States is in New Orleans.
Production of electricity, oil, refined products and port services in Louisiana, which makes up about 1.2 percent of US GDP, will be sharply curtailed for at least a few months, and the loss of port facilities will be felt across the US.
Hale said the consumer packaged goods (CPG) industry needs a multi-faceted response. "The most important need right now, of course, is for continued donations of products and cash," he said.
"But there will be a longer-term impact as well, with opportunities for one-stop-shop retailers like supercenters and warehouse club stores to win the ongoing business of customers who are visiting their stores for the first time and for supermarket operators to play up the convenience of their store locations and the value of their take-home meals."
According to ACNielsen, a higher proportion of affluent households than poor households are shopping more in warehouse club stores (9 percent of affluent households vs. 6 percent of poor households) and on the Internet (7 percent vs. 3 percent). Not surprisingly, the affluent segment has the highest percentage of households (26 percent) claiming that higher fuel prices have had no impact on their driving and spending habits.
However, food makers appear to have a largely optimistic economic outlook despite higher fuel prices. A recent survey from Grant Thornton found that most food companies believe they will experience growth and increase their capacities next year, with most potential to be found in the "better for you" category.
And as The Economist points out, natural disasters in developed countries have rarely had a long-term negative economic impact. For the food industry, it might be a case of just weathering the storm until fuel prices normalise and New Orleans finally gets back on its feet.
