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Thrifty spending will continue for consumers, NPD says

BY Allison Cerra

CHICAGO Consumers are not confident the economy will turn around any time soon and will continue to practice their current spending habits, the NPD Group said.

In its “What’s Next on the Road to Recovery” report, NPD examined food and beverage purchases among consumers. NPD found 1-in-5 consumers expected the economic state to worsen within 12 months, half of all consumers expected their financial situation to be the same as it is today. Looking ahead, 9-out-of-10 consumers said they will plan and watch their spending on food and beverages outside the home. 

“There are encouraging signs that the economy may be heading for recovery, but according to our findings, consumers, especially those with lower incomes, continue to struggle,” said Dori Hickey, director of product development at NPD and author of the report. “Most consumers have unquestionably felt the sting of tough economic times and have cut back on spending and adopted thriftier behaviors — behaviors that may become entrenched the longer the recession continues. Our findings suggest we may be looking at a new ‘normal.’”

The thriftier behaviors that consumers disclosed they would do more often than now over the next six months included decreasing spending on groceries, especially those with household incomes under $35,000; using coupons for food and beverage items from newspapers or magazines; stocking up on foods and beverages when they are on sale; searching store circulars for low prices on food or beverages that are on sale; buying less-expensive brands of foods and beverages; and searching for manufacturer coupons online.

“As food and beverage manufacturers and retailers begin to rethink their marketing communication programs as they start their recovery planning, it’s important that they understand their consumer’s mindset,” Hickey said. “Consumers lost personal wealth in this recession and they’re skeptical that ‘things will go back to the way they were.’ In their minds, it appears the road to recovery will be a long one.”

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PriceGrabber.com survey reveals consumers’ back-to-school shopping habits

BY Allison Cerra

LOS ANGELES Consumers may be tightening their wallets this year, but saving on back-to-school purchases is not necessarily a priority.

In a survey conducted by PriceGrabber.com between May 12 and June 1, respondents said they do not plan to save for back-to-school shopping this year but are starting their shopping early and spending the same amount as they did last year. When back-to-school shoppers were asked when they planned to begin saving for purchases this year, 64% of 1,718 online consumers polled said that they are not planning to save, while 19% of consumers started saving before April and 17% started saving between April and July.

“We are not surprised to see this new, optimistic trend of consumer frugality extend to back-to-school shopping,” stated Laura Conrad, president of PriceGrabber.com. “Further analysis of the data supports the idea that consumers are trying to absorb back-to-school spending in their monthly budgets by starting their shopping early to distribute their purchases.”

When asked what period of time they shop before the new school year begins, 26% of back-to-school shoppers planned to make purchases before July, while 31% planned to begin their shopping in July and 38% planned to start in August.

“The data is clear that consumers are still focused on spending the same amount or less on back-to-school purchases this year, even with the expected lift in the recession,” said Barbary Brunner, chief marketing officer at PriceGrabber.com. “However, instead of saving a little bit each month for back-to-school shopping and then making their purchases at once, we are seeing consumers engage in layaway-like behavior by purchasing a few items each month.”

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Despite sales drop, Rite Aid’s business will see ‘significant positive impact’

BY Michael Johnsen

CAMP HILL, Pa. Rite Aid on Wednesday reported a revenue decline of 2.1% to $6.4 billion, for the first quarter ended May 29. The results reflect a move in the right direction, Rite Aid officials contended, and that momentum should build along with some of the initiatives Rite Aid currently is putting into play.

“During the quarter, we made excellent progress on our initiatives,” stated John Standley, Rite Aid president and COO, who officially took the reigns as the chain’s CEO Wednesday. “We nationally launched our new Wellness+ customer loyalty program, began immunization training that will more than triple the number of Rite Aid pharmacists able to provide vaccinations and introduced the first products in our revamped private-brand program into the stores,” he said. “We expect these sales initiatives, along with the continued rollout of our segmentation strategy, to have a significant positive impact on our business long term.”

“Our team continued to improve operational efficiency to help offset the challenging economic and competitive environment impacting sales and margin,” added Mary Sammons, Rite Aid chairman and CEO. “We increased adjusted EBITDA as a percent of sales, [and] at the same time improved customer satisfaction ratings on both the front end and in the pharmacy. Our liquidity position remained strong, which is critically important if the economy continues to be slow to recover.”

Same-store sales for the quarter decreased 1% over the prior year’s 13-week period, consisting of a 1.3% decrease in the front end and a 0.9% decrease in pharmacy. Pharmacy sales included an approximate 138 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores decreased 1.7% over the prior-year period. Prescription sales accounted for 68.3% of total drug store sales and third-party prescription revenue was 96.3% of pharmacy sales.

In the first quarter, the company opened two new stores, relocated eight stores, remodeled one store and closed 15 stores. Stores in operation at the end of the first quarter totaled 4,767.

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