Economic volatility is rife and inflation rates are on the rise once again. Recent big changes to the country as a whole has left citizens with new worries and an uncertain future. On top of this, the cost of living remains a point of concern with people working tirelessly only to just get by at the end of each month. Obviously, this would mean great trouble for retail companies and their sales totals at the end of each quarter so how are they combatting this?
Inflation continues to inflate — consumers are struggling
Inflation is a measure of purchasing power. It is defined as the rate at which the prices of products and services change over a given period (usually a year). Simply put, when inflation rises, consumer spending declines because when prices go up, people can’t afford to buy as much.
Even shopping for essentials at a big box grocer has customers feeling a pinch on their wallets these days. The 12-month inflation is rate at 2.9% — which is at the higher end of what analysts had foreseen. Most predicted the report coming in at between 0.3% to 2.9%.
The most recent Consumer Price Index shows that the cost of key staples and services was up by 0.4% overall. This was released in January for the month of December.
Below is an outline of the changes noted in core materials and services as per the Consumer Price Index:
- Food: up 0.3%
- Energy: up 2.6%
- Gasoline: up 4.4%
- New cars: up 0.5%
- Used cars: up 1.2%
- Apparel: up 0.1%
- Shelter: up 0.3%
- Transportation: up 0.5%
- Medical care: up 0.2%
- Medical Care Commodities: 0.0%
When compared to November, every good or commodity has shown an increase — aside from medical care commodities. This is not good news in the slightest for consumers. Even stagnancy in rates would be a welcomed relief during these uncertain times, since it would appear that a decreasing inflation rate is simply too much to ask for.
Budget retailers like Walmart take the spotlight?
Naturally, customers now have to find fresh and creative ways to budget in order to maintain their lifestyles and save whatever money they can. Budget retailers are now the go-to for shopping needs, as a result. These tough economic times even have customers from a higher income bracket opting for budget friendly stores. For example, Walmart has boasted in recent quarters that it’s seeing more interest and sales from these groups as well.
The most common aid to high prices that retailers are showing lately is the inclusion of private label goods exclusive to each respective retail company. Walmart, for example, introduced Bettergoods, a new line of in-house, quality foods with novel flavors — at near unbeatable prices. Some of those new products include Pistachio Nut Butter, Oatmilk Non-Dairy Frozen Desserts, and Campfire Roasted Salsa.
However, the most notable attempt at budget friendly deals has to go to Dollar General. The retailer, famous for their wallet-friendly deals, announced in January that it would be introducing over 100 new in-house products, mainly under its Clover Valley label. Some of the new offerings include salad dressings, eight new flavors of ice cream, coffee syrups, and cinnamon rolls.
Recent data by Circana shows that sales of private label brands increased by 4% to $271 billion in 2024. Brand name sales were up by just 1%, proving shoppers are seeking cost saving opportunities over brand name.
Dollar General has observed that over half of customer’s purchases include a minimum of one private label item. As such, the grocer is willing to bet that the expansion of these ranges will equate to higher sales overall.
DG has around 3,200 products categorized under private labels at present. Some of these include:
- Clover Valley
- DG Health
- TrueLiving
- Smart & Simple
- Heartland Farms
- Studio Selection