This week, consumer-facing companies unloaded a dump truck’s worth of stats showing how 40-year-high inflation is affecting shoppers’ behavior. After taking the necessary safety precautions, your courageous newsletter writers dove into the reports to bring you the most important insights.
Americans are loading up on essentials
Walmart, the largest retailer on the globe by revenue, said on Monday that inflation-strapped consumers are opting for need-to-have goods (like household essentials and groceries) and avoiding nice-to-have purchases, such as new clothes.
That echoes a warning from Target earlier this summer that shoppers are shunning big pandemic-era purchases—including TVs, outdoor furniture, and fitness equipment—as their budgets get squeezed. The good news from all this? Expect “everything must go”-level discounts as Walmart and Target try to get rid of their excess inventory.
Fast food is more attractive
When inflation is rampant, nothing beats a Double Cheeseburger + Coke, topped off by ice cream.
Both McDonald’s and Coca-Cola reported impressive sales in Q2. McDonald’s said that its value menu and new product releases (did not know Chocolatey Pretzel McFlurry is now a thing) brought diners to the Golden Arches, while Coca-Cola showed that its brand is so durable that not even decades-high inflation could convince consumers to buy RC Cola instead.
Meanwhile, Unilever’s ice cream division, which includes Ben & Jerry’s, was one of the conglomerate’s few units that posted volume growth last quarter.
- People are still shelling out for cars: While a shortage of parts and China lockdowns stung GM’s profits, the automaker said that there was no sign that demand was waning for car purchases.
- Same goes for anniversary gifts: LVMH, the world’s largest luxury goods company, called its first half of 2022 “excellent” as more shoppers scooped up Louis Vuitton handbags and celebrated with Dom Perignon Champagne.
Bottom line: Higher prices appear to be shifting consumer behavior from certain categories to others—but overall spending has remained resilient.