Costco Execs Warn of Looming Recession Because of One Change Shoppers Are Making to Their Buying Habits (investor, income)
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In times of economic struggles, Americans tend to change their shopping habits. The “lipstick effect,” where people will continue splurging on smaller items such as candles and cosmetics, but delay larger purchases, is one example. Costco executives have also spotted other consumer spending changes in their warehouse clubs’ sales lately.
In a call with investors reported by Business Insider, Costco Chief Financial Officer Richard Galanti said he’s seen some customers switching from purchases of beef products to less expensive choices, like pork and chicken. He said he’s also seen this trend historically as the U.S. entered a recession in the past.
He added that some customers are purchasing canned meat and fish products, which cost less and also have a longer shelf life. In a situation of hyperinflation — or in the case of job loss sparked by a recession — consumers who stock up on non-perishable items will be able to stretch their savings and unemployment income further if they already have a well-stocked pantry.
A newly released report from the United States Federal Reserve found that 64% of Americans have switched to cheaper versions of products to make ends meet amid inflation. Meanwhile, 66% of those polled (respondents could choose more than one option) said they are using less of specific products or eliminating them entirely. That report tracks with Costco’s data in a few ways, showing Americans choosing less pricey products across the board.
Galanti also noted that sales of Costco’s private label brand, which sell for less than national brands, had risen in the last quarter. Overall, Costco sales dropped by 4.2% worldwide, and 3.5% in the U.S., in the first quarter of 2023. A large percentage of that decrease, Galanti said, stems from consumers delaying big ticket purchases like TVs and refrigerators.
Not at my house. My wife routinely spends $100-300/week at Costco.
Us too. BUT we are a part of that group that is not buying a lot of beef.
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We feel like Costco has a $200 cover charge, because we always end up spending that much about twice a month. Last time we went well over because we bought a big package of beef, New York Strip steaks for a Mother's Day family BBQ.
Could it be the price of beef is up 30-50% and people instinctively have trouble paying such high prices ??
Some has, some hasn't. I can still get a tomahawk steak for the same price per pound as 2019, but now it no longer goes on sale.
While beef has gone up, what I buy hasn't gone up 50% for what we buy and where we buy it, just "more" enough for us to buy it less often, especially when pork is still cheap.
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Beef is not the only item which goes up,everything else does as well,name me something which has not.
Saw some ugly fresh green beans at $1.29/lb today at Kroger.thats a price drop.
Eggs have gone back down to under $2,I have coupon for free carton of large eggs.
coffee,tea,toilet paper,toothpaste,hand lotion.
I was looking for rubber bands,thats $2.49 ,can you imagine?
Went grocery shopping yesterday,plenty of markdown ion fresh fruits,have they become discretionary items?Fuji apples,dragon fruit,Asian pears, and pomegranite for 99 cents ?
Pineapple for 99 cents.
Seafood is higher but no one is buying $18.99 for a lb of scallops.
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