Shoppers are pushing back against food inflation, says one grocery chain operator.
“Consumers are reacting,” Mike Davidson, president and CEO of Buehler’s Fresh Foods told Yahoo Finance. The company he runs owns 14 grocery stores, 9 restaurants, and 8 liquor shops in Ohio.
Davidson says revenue is up year-over-year, but he’s seeing customers buy fewer number of goods due to inflation.
“Units are moving down,” he said. Grocery stores aim at moving a higher number of “units” of food out the door, in order to make room for fresher merchandise.
Consumers are trading down to lower priced items and generic brands. They’re also pushing back against “luxury” foods — or higher end goods, he said.
“Some of the ‘less essential’ items — the seafood department — has been struggling this year. Because people probably aren’t splurging on lobsters and crabs like they might have in the past,” said Davidson.
Same goes for the more expensive wines and liquors.
‘We’re not Walmart’
In turn, his purchasing managers push back against higher prices from suppliers. “We advocate for our customers,” said Davidson.
“We’re not Walmart, we’re not Target,” he said. “But when someone calls and says ‘Hey I’m going to raise your costs 20% to cover my commodity piece’ — my comment back to that supplier is — ‘Hey if we put that retail on your product, it will sit there and no one is going to buy it.”
The latest Consumer Price Index (CPI) read shows food prices are up 10.4% over the last 12 months. From flour to butter — consumers are paying more for almost every item.
Higher agricultural commodities and energy costs are major contributors to food inflation. Labor costs are also impacting prices.
Even though consumers need food and gas to survive and work, Davidson says there is a limit to how much they will bear.
“When inflation ends is when the consumer says it ends,” he said.
Ines is a markets reporter covering equities. Follow her on Twitter at @ines_ferre
Image and article originally from finance.yahoo.com. Read the original article here.