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Groceries have gotten expensive. As of March 2023, food prices were up 8.5 percent compared with a year earlier, per the U.S. Bureau of Labor Statistics’ April 12 consumer price index report. That’s actually down a bit from the previous month—hey, finally some good news!—but individual items are still pricier than they were a year ago. That includes eggs, which are up 36 percent, and frozen veggies, which are up 20.1 percent. Even cookies are looking like a terrific splurge these days, having increased in price by 16.6 percent.

Families are feeling the pinch, and changing their shopping habits. Accordingly, sales of private-label products—in-house brands that are typically cheaper than their brand name alternatives—have surged in response to inflation. Kroger, as one example, experienced a 10 percent increase in its private-label sales compared with the previous year. Walmart, too, is seeing more interest in its own brands, such that “We’ve seen some customers this year trade into private brands more than they did in previous years,” Walmart’s U.S. President John Furner said on a November earnings call.

In response, many retailers are expanding their private-label offerings. According to a food industry trade group survey, more than 80 percent of respondents have plans to increase their investments in private-label brands over the next two years. It probably doesn’t hurt that these products tend to be more profitable for retailers than the brand name alternatives.

Consumers aren’t just buying private-label items at their usual grocery stores—they’re also changing where they shop, in pursuit of more affordable food. Dollar stores have become the fastest growing food retailers by household expenditure share, according to a recent survey of 50,000 households, put out by the Friedman School of Nutrition Science and Policy at Tufts University. The growth is most pronounced in rural parts of the United States, with the household expenditure share increasing by 102.9 percent between 2008 to 2020. Yes, 2020—this survey measured shopping patterns from 2008 to 2020, but there’s no suggestion in the literature or anecdotally that dollar stores have gotten less popular since inflation in food prices became so rampant.

The Tufts researchers express concern that the dollar store shoppers, who tend to have lower incomes and/or be people of color, may be stuck with unhealthier items like chips and soda instead of fruits and vegetables. The good news: Dollar stores across the country are expanding their grocery sections, adding eggs, milk, cheese, and fresh and frozen produce. It’s not happening everywhere all at once, quite yet, but more and more dollar stores are offering more and more types of food to budget-conscious shoppers.

Discussion Questions:

  1. Are shoppers likely to maintain these new shopping habits, if and when inflation eases?
  2. What else can grocery stores do to encourage budget-conscious shoppers’ spending?
  3. What can be done to ensure people in rural communities, low income families, and people of color have access to healthy foods like vegetables and eggs?

Sources: Trefor Moss, “Supermarkets Offer More Store Brands to Lure Cost-Conscious Shoppers,” The Wall Street Journal, December 14, 2022; Sarah Michals and Chris Jones, “Dollar Stores Are the Fastest-Growing Food Retailers, New Study Finds,” WXYZ, January 26, 2023; Nik Popli and Solcyre Burga, “Here’s Why Grocery Store Prices Are so High Right Now,” Time, January 28, 2023; Anna Helhoski, “The Cost of Groceries: Are Food Prices Going Up?” NerdWallet, April 12, 2023; Sarah Messer, Becky Worley, and Kelly McCarthy, “How Dollar Store Grocery Options Stack up to Traditional Stores,” Good Morning America, March 7, 2022

Photo from iStock.com/RapidEye