No matter how you measure it, or how you spin it, income is intimately linked to food insecurity.
Who we are as a nation is changing at a socioeconomic level, due to a dwindling middle class. While the share of U.S. adults in the middle class has been shrinking since the 1970s, both extremes of the income spectrum have grown. Many would argue that the lower ends of the income spectrum have grown disproportionately compared to the others. What our report, The Business of Thrift: Understanding Low-Income and Value-Oriented Consumers, has uncovered is that budget-constrained shoppers are faced with any number of increasingly complex decisions that underlie attitudes and purchase behaviors.
To get an in-depth perspective on the key findings from The Business of Thrift research, particularly around the link between income and food insecurity, we interviewed The Hartman Group’s two lead analysts on the study, Sarah Marion, Ph.D., and Robertson Allen, Ph.D. Here are the highlights from our conversation about how low-income shoppers are coping in the face of trying to keep their household budget under control.
We hear a lot about food insecurity today. In our The Business of Thrift: Understanding Low-Income and Value-Oriented Consumers report, how do we define food insecurity?
There are multiple ways to think about food insecurity. The USDA measures food security and insecurity annually, with the latest statistics saying that almost 12% of U.S. households are food insecure. The USDA measures food security on a scale and focuses on how often households had trouble affording food.
We asked a wider set of questions about how frequently consumers experience various types of limitations to their food access, including budgetary limits, difficulty accessing food, difficulty affording healthy foods, and having to choose between buying food and paying for other necessary expenses.
The lower one’s household income, the more likely one is to experience all varieties of limitations and the less able one is to plan ahead and budget for food shopping. And low-income consumers perceive price to be a key barrier between their current realities and their ideals and goals when it comes to improving their health and wellness and eating generally. Income is intimately linked to food insecurity, no matter how you measure it.
The economy, by many indicators, is doing reasonably well, yet so many consumers are not feeling that way. Is the squeeze that low-income consumers and even middle-class consumers are feeling today, due to income inequality, similar to that of the 2008 recessionary period? Are we seeing signs of consumers exhibiting the same type of thrift-oriented behaviors as during recessionary times – this time due to income inequality? Is this a precursor to a recession?
This is not the same as 2008, but it does have roots in the Recession. Income inequality was growing before the Recession, so the behaviors and cultural value of thrift that we see among low-income and middle-class consumers existed before the Recession. What the Recession did was exacerbate and increase that inequality by dropping a lot more people into the “low-income” bucket than had been there before – through job loss and the housing crisis.
Now, ten years on, many have recovered, though on average not to where they were in 2007, before the crisis. But many are stuck; there were jobs (especially in manufacturing) that will never come back. It can be hard to find work again, especially in middle age, when young people with more education and more skills are available to work for less.
The key economic indicators we hear most about – the stock market, the jobs numbers – don’t show the uneven underbelly of the economy. High finance is doing great, big companies are doing great, the well-off came out of the Recession even better than they were before, because they had the resources to ride it out and are invested in the financial markets. Last year’s tax cuts are funneling money upward, which increases those key indicators. However, the jobs being created aren’t necessarily good jobs – the gig economy, retail, restaurants, and the service sector in general do not provide the kinds of steady paychecks, steady schedules, or health benefits that people need for long-term class mobility.
We think eventually the economy will have to reckon with the fact that a growing number of consumers can’t participate in consumer capitalism in the way that the economy needs them to. Obviously, however, how far off that is we don’t know. A trade war and rising food prices would also hit low-income and middle-class consumers hard, since a higher percentage of their income goes toward food and household goods. We’ll leave any discussions/arguments about any market correction to the experts!
What can companies do to allay consumers’ stress over food insecurity and trying to stretch their paychecks?
The short answer is if consumers had more money, they would buy more food. Getting more money in their pockets is good for consumers and good for food companies. Henry Ford did it 100 years ago and today we think that Amazon recognizes this principle. They aren’t being altruistic in paying their warehouse workers $15 per hour. Rising wages means workers buy more.
Lobbying for increased access to SNAP/WIC/EBT is another way of getting more money in low-income consumers’ wallets that many food companies and retailers already do.
The key is really understanding what low-income populations your particular company serves. Younger low-income consumers want to participate in current food trends (e.g., fresh, less processed, global culinary trends, quality cues) but at lower prices. Families with children are looking for good deals on kids’ staples and ways to get a dinner on the table that is tasty enough, healthy enough, and quick to make. Understanding your particular low-income shoppers will also help you know when to time promotions around payday (when folks are stocking up) and the mid-month/end-of-month stretch (when folks really need to stretch those dollars and are only buying necessary staples).
Low-income shoppers need more affordable solutions for fresh food, whether it’s smaller pack sizes at lower price points, innovations that maximize freshness and prevent spoilage, or discounts that bring down the total cost (such as $5 off when you buy $15 of produce). Another option is meal deals, or a promotion on a suite of cross-merchandized products that make an inexpensive, healthy, tasty meal that can last a few days.
In the center store, low-income shoppers often don’t have the flexibility to take advantage of sales if an item isn’t on their list already or if they must buy multiple items. Solutions that make sales and coupons easier to access and use for everyone would help them participate more.
As leaders in the study of American food culture, The Hartman Group has been tracking how Americans shop for food since the 1990s. From one-stop shopping to multichannel shopping to online markets and click-and-collect, we continue to track consumers’ evolving perceptions, needs, habits and relationships with food retailers. New to the 2017 report is a special section on the expansion of the discount grocery channel, the emerging fresh-format channel and smaller-footprint retail formats.