Thread: Buyers find ways to save - Americans are making changes in l

Buyers find ways to save

Americans are making changes in lifestyle to deal with skyrocketing prices and plunging bank accounts

By Michael Barbaro and Eric Dash, The New York Times
Stung by rising gasoline and food prices, Americans are finding creative ways to cut costs on routine items such as groceries and clothing, forcing retailers, restaurants and manufacturers to decode the tastes of a suddenly thrifty public.
Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares.

Though seemingly small, the daily trade-offs they are making -- more pasta and less red meat, more video rentals and fewer movie tickets -- amount to an important shift in consumer behavior.

In Ohio, Holly Levitsky is replacing the Lucky Charms cereal in her kitchen with Millville Marshmallows and Stars, a less expensive store brand. In New Hampshire, George Goulet is no longer booking hotel rooms at the Hilton, favoring the lower-cost Hampton Inn. And in Michigan, Jennifer Olden is buying Gain laundry detergent instead of the higher-priced Tide.

Behind the belt-tightening -- and brand-swapping -- is the collision of several economic forces that are pinching people's budgets or, at least, leaving them in little mood to splurge.

The price of household necessities has surged, with milk topping $4 a gallon in many stores and regular gasoline closing in on $3.60 a gallon nationwide.

Home prices are sliding, wages are stagnant, job losses are growing, and the Standard & Poor's 500-stock index, a broad measure of stock performance, is down 6 percent in the last year. So consumers are going on a recession diet.

Burt Flickinger, a longtime retail consultant, said the last time he saw such significant changes in consumer buying patterns was the late 1970s, when runaway inflation prompted Americans to "switch from red meat to pork to poultry to pasta -- then to peanut butter and jelly."

"It hasn't gotten to human food mixed with pet food yet," he said, "but it is certainly headed in that direction."

Retail sales figures and consumer surveys confirm that Americans are strategically cutting corners, whether it is at the coffee house or the airport. (In: brewing coffee at home and flying coach. Out: Starbucks and first class.)

In March, Americans spent less on women's clothing (down 4.9 percent), furniture (3.1 percent), luxury goods (1.3 percent) and airline tickets (1.1 percent) compared with a year ago, according to MasterCard SpendingPulse, a service of the credit card company that measures spending on 300 million of its cards and estimates purchases with other cards, cash and checks.

Wal-Mart Stores reports stronger-than-usual sales of peanut butter and spaghetti, while restaurants like Domino's Pizza and Ruby Tuesday have suffered a falloff in orders, suggesting that many Americans are sticking to low-cost home-cooked meals.

Over the last year, purchases of brand-name cookies and crackers have fallen, according to Information Resources, which tracks retail sales.

Sales of Nabisco graham crackers have dropped 7.5 percent, and Keebler Fudge Shoppe cookies have slipped by 12.3 percent. Not even beer is immune. Sales of inexpensive domestic beers, such as Keystone Light, are up; sales of higher-price imports, such as Corona Extra, are down, the firm said.

"People have started to shift spending as if we were in a recession," said Michael McNamara, vice president for research and analysis at MasterCard.

TVs still selling

By no means has the economic downturn been bad for all product categories. Sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms.

Falling prices for such devices and a looming government deadline to convert to digital television have helped. At a Best Buy in Southfield, Mich., James Szekely, 28, a mechanical engineer, was shopping for a big high-definition TV that he expected would cost at least $2,000, an expense he rationalized because "at least we can watch movies at home."

(In a survey conducted this month by the NPD Group, a research firm, consumers suggested that they would sooner cut spending on clothing, furniture and eating out than on video games.)

Many retailers are struggling to adjust to the new needs. Clothing sales have started to sink at department stores like Macy's, Kohl's and J.C. Penney.

Consumers are spurning small indulgences. Starbucks is warning shareholders of a drop-off in purchases, and sales have dipped at higher-end restaurant chains.

But chains that emphasize low prices, such as TJ Maxx and Wal-Mart, are thriving. And cut-rate supermarkets, such as Save-A-Lot, are swamped.

"People are not not spending, but they are changing how they spend," said Marshal Cohen, chief analyst at the NPD Group.

http://www.newsobserver.com/nation_worl ... 51716.html

Thrift store sales are definitely rising too.