Tuesday, June 9, 2009

Warning: Don't Be Tempted to Decrease Grocery Bill by Increasing Pasta

As I mentioned in the previous blog, we gave ourselves a treat and bought this past Sunday's New York Times. In there was an article about the recession from Walmart's point of view:

With the recession in its 18th month and unemployment now topping 9 percent, even semi-conspicuous consumption is a distant memory. Consumers are hunkered down. But when they do venture out, chances are they’re on their way to places like Wal-Mart and other big discount chains.

“Our sales — it’s like holding up a mirror to our society,” said John E. Fleming, the chief merchandising officer for Wal-Mart, the nation’s largest retailer.

So what are Wal-Mart, with 4,100 stores across the country, and other major retailers seeing?

Less browsing in the aisles, for one thing. Consumers now are “very disciplined in terms of making sure that they don’t go beyond what they have on their lists,” Kathryn A. Tesija, Target’s executive vice president of merchandising, told investors recently.

Food, of course, is high on those lists (discretionary items like clothes and furniture are not). But consumers are cracking their wallets only so far. Many are trading down to private label groceries. At Wal-Mart, sales of refrigerated pizza were up last month compared with a year ago. Lower grades of meat are outselling the higher-grade, pricier cuts. A recession protein hierarchy has emerged, with ground beef trumping steak, and chicken trumping beef. Some consumers are forgoing protein altogether, opting for pasta.

“We’re seeing a movement away from protein into carbohydrates,” Mr. Fleming said. “It stretches the dollar a lot further.”

Retailers generally don’t divulge details of their sales by category of goods. But they were willing to discuss trends. One stood out: consumers are discovering there’s no place like home.

“This whole idea of staying home and entertaining at home, we’re seeing that everywhere,” Mr. Fleming said, “from the ‘take and bake’ pizza to the $5 movies.” Ms. Tesija noted that “sales of popcorn poppers and microwave poppers are very strong.”

Retailers say consumers are trying to make being cooped up as painless as possible. Mr. Fleming said that would explain why even in this economy, sales of flat-panel and high-definition televisions at Wal-Mart are strong. After all, the retailer’s $378, 32-inch RCA LCD television is more affordable than a vacation. (Which may be why retailers like Macy’s say luggage sales are among their weakest categories.)

Home Depot’s Craig Menear, executive vice president for merchandising, told investors recently that vegetable and herb sales were thriving because “more customers are opting to grow their own vegetable gardens.”

Car maintenance and repair is also big. Sales of motor oil, filters and tires are among Wal-Mart’s top sellers. “Anything that helps their car last longer is doing well because they’re not buying new cars,” Mr. Fleming said.

Consumers are spending to keep themselves in good health too, for fear of having to miss work. Wal-Mart said sales of vitamins are robust. So are sales of over-the-counter medications. Sales of sleep aids, pain relievers and antacids have spiked.

Home repair projects are also a priority. Home Depot’s basic repair and maintenance products — plumbing items, roofing materials, caulk — have sold better than other items.

At Wal-Mart, sales of baby formula and clothing are up. Still, Mr. Fleming said Wal-Mart could tell when parents were strapped: in the first weeks of the month they buy packs of 88 diapers; by the end of the month they’re buying the 40-pack. And at Sam’s Club, sales of pull-ups — that intermediate step between diapers and underwear — are down, suggesting parents are moving their children directly to underwear to save money.

The bottom, apparently, has met the bottom.

When I was potty-training, we didn't even have pull-ups. The development of pull-ups is a classic case of perceived need "sold" to the American market. I am glad that some people are skipping what I see as an unneeded expense and potty training like we did in the old days.

However, the scariest part of this article was reinforced by a radio interview today, on Public Radio, by Bob Edwards of Dr. William Meller, an expert in evolutionary medicine. Dr. Meller explained that while our ancestors had relatively plenty of protein and consequently we are wired to stop when we are sated, full-blown carbohydrates are a relative newcomer to man's diet; and there is nothing in our system to tell us when to stop eating bread, pasta or chips. I know personally that is true. I often refer to "munchies" as my "drug of choice" because sometimes I seem addicted to them as I eat too much when I am tired or in a down mood. Companies such as Lay's Potato Chips know this behavior well. Their ads in the last decade ended with "You just can't eat just one."

Dr. Meller also noted that six percent of health care costs in America are related to diabetes, much of which is a result of eating too much bad stuff such as carbohydrates. Unfortunately in these lean times many people are going to get heavier and sicker. Going for the cheap, carbohydrate-filled food such as pizza and pasta will be the path of least resistance for many cash-strapped Americans, but they will be paying for it later with compromised lifestyles AND higher health costs.

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