April 5, 2008 / 7:21 AM / 10 years ago

Shoppers scrimp as food prices rise

SECAUCUS, New Jersey (Reuters) - Patricia Norris’ family is feeling the one-two punch of higher fuel and food prices.

<p>Shopper Laura Miller (L) and her daughter shop at a Wal-Mart store in Santa Clarita, California April 1, 2008. Already squeezed by high gasoline prices, slumping home values, a weakening job market and the possibility that the U.S. economy is in a recession, consumers have adopted a no-nonsense approach to shopping, passing over a trip to Target or a local grocery store if they can find lower prices at Wal-Mart. REUTERS/Mario Anzuoni</p>

Her husband works as messenger, driving around to deliver packages. But the job is not as profitable as it once was because rising fuel prices are eating into his earnings.

With money tight and food prices rising, Norris can no longer afford to buy beef and chicken on a regular basis.

“We buy meat only for special occasions. Like for Easter, we had a ham,” she said after a shopping trip at her local Wal-Mart in Romeoville, a mixed blue- and white-collar suburb of Chicago.

Norris must purchase only what is on her shopping list, to avoid spending more than she can afford.

“Sometimes I cry,” she said, when she passes items on store shelves she can no longer buy.

Across the United States, consumers like Norris are finding that grocery shopping has become a sobering experience as their budgets fail to keep pace with food costs.

Reuters reporters visited Wal-Mart stores in Romeoville, Illinois, Secaucus, New Jersey and Santa Clarita, California, on the last day of March and the first day of April to find out how shoppers are navigating the food aisles when they have payday cash in their pockets.

Already squeezed by high gasoline prices, slumping home values, a weakening job market and the possibility that the U.S. economy is in a recession, consumers have adopted a no-nonsense approach to shopping, passing over a trip to Target or a local grocery store if they can find lower prices at Wal-Mart.

They are buying cheaper store-brand products, avoiding costly cuts of meat, consolidating trips, clipping coupons, constructing well-researched shopping lists and avoiding splurges to spend only the bare minimum.

“I don’t buy anything I don’t have to,” Norris said.

FOOD PRICES JUMP MOST IN 17 YEARS

U.S. consumer food prices normally rise by about 2.5 percent annually, but they increased by 4 percent in 2007 -- the biggest increase in 17 years, according to U.S. Agriculture Department data.

Prices continue to rise. A survey conducted by the American Farm Bureau Federation in February showed that in the beginning months of this year, the cost of 16 grocery items, including flour and cheddar cheese, was $45.03, up $3.42, or 8 percent, from the fourth quarter.

That has consumers like Laura Miller taking a calculated approach to shopping, much of which she does at Wal-Mart in Santa Clarita, California, a planned community on the outskirts of Los Angeles.

Married with three little girls, Miller said her food costs have almost doubled to $300 every two weeks.

She plans meals two weeks in advance and shops with the daughter who doesn’t ask her to buy snacks. Miller’s printed shopping list, organized by item and place of purchase, shows that she does the bulk of her buying at Wal-Mart.

“I won’t pay $6 for a box of cereal when I can get it for $3” at Wal-Mart, she said.

Karen Wikholm, a library worker from Romeoville, is another who does her homework before heading to the store, sorting through newspaper ads, hashing out which stores offer the best deals and figuring out where her coupons can go farthest.

She then gets in her car and, in one day, goes to her local Wal-Mart, Dominick’s and Jewel grocery stores, buying only what is cheapest in each store.

The three stores are located about a mile from each other on a stretch of road that includes several strip malls interspersed with vacant plots for planned housing developments.

“We’re shopping as the paycheck comes,” she said.

PAYDAY MEANS GROCERY DAY

Increasingly, shoppers like Wikholm must wait until payday to load up on groceries and then hunker down until the next paycheck.

At all three Wal-Mart stores, that trend was visible.

The Wal-Mart in Secaucus, a few miles outside New York, operated at a leisurely pace on the afternoon of Monday, March 31. Shoppers slowly browsed store aisles or stopped at the in-store McDonald’s for a snack.

But the store was bustling with activity at the same time the next day, as shoppers pushed overflowing carts loaded with cereal, soda, juice, frozen food and bread.

“There’s no question that people are shopping when they have money in their pocket,” said Tracy Ferschweiler, the manager of the Secaucus store.

Leslie Dach, executive vice president of corporate affairs and government relations at Wal-Mart, said the cycle of shoppers running out of money in between paychecks and then flocking to its stores on payday is “more pronounced, more visible.”

While many U.S. retailers are facing waning sales as shoppers cut back on purchases of clothes, jewelry or home furnishings, Wal-Mart’s vast grocery business and its emphasis on low prices is spurring a resurgence at its U.S. stores and in its stock price.

Its stock is up 15 percent this year, while Target, a more upmarket discounter, is up 7 percent, and the Dow Jones industrial average is down 5 percent. Wal-Mart’s February sales at U.S. stores open at least a year rose 2.6 percent, helped by strength in its grocery business, while Target reported a 0.5 percent gain in its February sales.

Annette Reilly was at the Wal-Mart in Secaucus on April 1 to buy cereal for her 2-year-old grandson, who was sitting in her shopping cart. She said she is now buying cereal at the discount retailer because it charges $1 less per box than her local Stop & Shop.

“Why not?” she said of making the trip to Wal-Mart. “I can come here and save $5.”

Saving those extra dollars is becoming more crucial.

Mary Ann Doyle, a 75-year-old retired teacher browsing in the dairy aisle at the Wal-Mart in Santa Clarita, said she is now buying food in smaller quantities, like half a dozen eggs instead of a dozen, and using more coupons.

“It needs to get better,” she said of the economic situation. “I hope we’ve hit rock bottom.”

(Writing by Nicole Maestri; Reporting by Nicole Maestri and Fred Katayama in Secaucus, Lisa Baertlein in Santa Clarita, California, and Bradley Dorfman in Romeoville, Illinois; Editing by Martin Howell and Eddie Evans)

For previous stories, graphics, pix and video on rising food prices, click here

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