Consumers continue to cut back spending amid economic woes
Changes in consumer behavior are driving a lot of the developments. A new poll from Minnesota Public Radio News and the University of Minnesota's Humphrey Institute sheds light on some of those trends.
And, there are many downsides, but also some upsides, to the shifts in consumer spending.
If you go to a store these days, it seems like everyone is looking for a deal. Here at this Cub Foods store in Stillwater, that even seems true for the pint-sized shoppers, who seem to pick up all the free samples.
Cheryl Lee is the mother of two small boys, she said, despite the freebies, most stuff at the grocery store seems to cost a lot more these days. The soft economy has her hunting around more for bargains, and watching her family's spending, she said while tucking her coupon book into her purse.
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She's not willing to completely cut out pricier items, like organic foods, just yet, but it's getting tougher to afford them.
"I try and do fruits, mostly fruits, but I buy them when they're on sale. There's not much on sale right now," Lee said.
The MPR/Humphrey Institute poll found most Minnesotans are cutting their costs around food. Seven-hundred Minnesotans participated in the survey, which has a margin of error of plus or minus 3.7 percent.
Two-thirds are eating out less often, and 6 in 10 are buying cheaper groceries.
Now, this kind of news can be tough for companies like Cub, which have thin profit margins. But on the other hand, retailers like Cub stand to boost revenues selling more of the cheaper stuff.
In the meat department at Cubs' Stillwater store, where fine cuts of steak beckon to shoppers, Cub President Brian Huff said lately, many shoppers are pushing their carts right past the filet mignon.
"Specifically in meat we have seen a big shift from people buying red meat, which is typically more expensive, and trading down, if that's what you want to call it, to cheaper proteins like poultry and pork," Huff said. "Our own brands, our private label sales are up. But then even in our grocery aisles, our canned tuna sales are through the roof. People are looking for cheap meal solutions."
Golden Valley-based General Mills is also enjoying a boost from these trends. The food company is doing well as more people eat at home.
But for other industries, the MPR/Humphrey Institute poll has little good news.
Two-thirds of respondents are cutting back on entertainment. More than one-third have postponed a vacation and 9 percent have cut back on medications.
And, about 30 percent of respondents are holding off on buying a major appliance or a new car.
Robert Monaghan is one of them, even though he's got good job security. He's the pastor of Incarnation Church in Minneapolis.
Monaghan said he's not worried about losing his job. But, he is losing ungodly amounts of money in his retirement account. His worries about retirement savings are prompting him to cancel a trip home to Nebraska for Thanksgiving, and to squeeze more miles out of his 8-year-old Hyundai.
"I was going to buy a new car, but I'm not going to now," Monaghan said. "And I don't know how far off I'm putting that, but that's going to have to wait."
That sort of procrastination is widespread and is proving devastating for the nation's automakers. General Motors said it might not have enough cash to make it through the end of the year, and Ford Motor Company just reported a nearly $3 billion operating loss in the third quarter. And, with major employers like the automakers running aground, more job losses will likely follow.
