Shoppers feeling squeeze buy a little at a time

Posted: May 17, 2008 - 10:30pm  |  Updated: May 18, 2008 - 7:46am

NEW YORK - Shoppers have been lugging ever-larger products to their ever-bigger cars for years. Now, more of them are feeling so pinched by the sagging economy that they are embracing a new behavior: buying a little at a time.

From meat to mustard, consumers are trying to control their food bills by buying smaller-size items as they grapple with soaring prices. Companies have taken note, experimenting with different measures like 3/4-gallon milk jugs and pies that have shrunk to 6 inches.

"I don't stockpile any more," said Lorraine Woodcheke, a publicist from San Francisco who in January started buying smaller containers of soy milk, olive oil and fresh-cut fruit to control her budget. "I don't have a pantry that is overflowing. I can't justify letting food go bad the way I used to."

Data from a research company, The Nielsen Co., and retailers that sell fuel show that downsizing is even occurring at the pump, with drivers limiting how much they fill their tank to avoid getting hit with a hefty payment at one time.

Customers are purchasing less gas per trip, even credit card customers, said Jeff Lenard, spokesman for the National Association of Convenience Stores, which represents 80 percent of the gas sold in the U.S.

"The new sticker shock is the fillup price, not the price per gallon," he said.

Greg Parker, chief executive of Parker Cos., which operate 25 convenience stores in the Savannah area, said that the number of customer transactions for gasoline at his chain in January and February increased by a little more than 3 percent compared with a year earlier, while the number of gallons sold was down 8.5 percent. That means drivers are putting gas in the car more often but buying fewer gallons per trip, Parker said.

That behavior isn't saving shoppers any money - they're still spending the same dollar amount on gas per week, said Todd Hale, senior vice president of Nielsen.

While plenty of shoppers are still buying in bulk, helping boost sales at warehouse club operators like Costco Wholesale Corp., the growing trend of buying in bits is the latest sign of how cash-strapped people are.

Part of it may be psychological: Consumers can't adjust to having to pay $60 at once to fill their gas tank or spend $150 on the weekly food bill. Many are also more conscious of being wasteful: Throwing out milk when it was $3 per gallon may not be a big deal, but it's another matter when it's $4.

Some consumer advocates warn that the smaller packages are a way for food makers to pass on the increase in ingredient costs. And even if buying smaller means buying more often - and not saving money in the long run - many shoppers feel they don't have a choice.

Food prices rose 4.4 percent during the past 12 months, with prices for basic items shooting up even more: Bread is up 14.7 percent and milk is up 13.3 percent over the past year, according to the latest Consumer Price Index. Gas could reach more than $4 per gallon on average this summer.

Creating new options

When the option is available, customers are now favoring smaller sizes in such items that have had significant price increases such as cooking oil. The last time consumers were buying a little at a time to conserve cash was in the 1970s, when food and oil prices surged to record highs, said Burt P. Flickinger III, managing director of Strategic Resource Group, a retail consulting firm.

"Consumers are constraining spending to a point that shoppers only buy what they need for today or tomorrow and not next week or next month," he said.

And some grocery chains and food companies are creating new options, from milk to pies, in part to ease the financial blow. The world's largest retailer, Wal-Mart Stores Inc., is adjusting its product mix to respond to the trend.

Wal-Mart is making sure it has more smaller sizes of items such as pasta and condiments such as mustard as well as single rolls of toilet paper in the days before people receive government checks such as Social Security and public assistance that arrive at the beginning of the month, said spokesman John Simley. But after payday, the discounter stocks up on bulk items as consumers have enough money to spring for bigger sizes that can last longer.

Kroger Co., the nation's largest traditional grocery chain, is testing 3/4 gallons of milk under its store brand - a rarity amid the usual half- and full-gallon sizes - while bottlers for PepsiCo Inc. and Coca-Cola Co. are experimenting with a 16-ounce soda bottle as an alternative to the traditional 20-ounce size.

Sara Lee Corp. is expanding its Simple Sweets line, unveiled last year, that features 6-inch pies that sell for $2.50 to $2.99 and serve three to four. That compares with the traditional 9-inch versions that sell for about $5 and serve six to eight.

"The value of not wasting is becoming more and more important," said Chuck Hemingway, marketing director of Sara Lee's food and beverage division.

Same price per ounce

Food companies say the new sizes are priced the same per ounce as the bulkier versions. However, Edgar Dworsky, the founder of Consumer World, an online consumer education guide, warns that many companies, including ice cream and margarine makers, are slimming down their products so they can pass along soaring dairy prices and other costs to shoppers.

Some food and beverage makers say the initial catalyst for offering smaller sizes was to target "empty nesters" - aging boomers whose children were leaving the home. But the harsh economy has now accelerated those plans.

Coca-Cola Bottling Co. Consolidated began replacing 20-ounce Coke bottles with 16-ounce and 24-ounce sizes last fall in 64 convenience stores in North and South Carolina as part of a move to expand shoppers' options.

The 16-ounce bottles are priced at 99 cents, while the 24-ounce bottle are priced from $1.39 to $1.49. Spokesman Lauren Steele said the company, the second largest U.S. bottler for Coca-Cola, is expanding the test to 1,700 stores in the southwestern part of Virginia.

While the economy wasn't the impetus for the change, the smaller sizes are resonating with shoppers, Steele said.

At Kroger, the chain began testing the 3/4 gallon under its store brand in 77 stores in Cincinnati and Northern Kentucky, said spokeswoman Denise Osterhues. At one Cincinnati store the new size was priced at $2.49, while the gallon was priced at $2.80. Osterhues said that with weekly specials, the price per ounce is the same.

"It's a good price for what you get, and it doesn't spoil before you can use it," said shopper Tonya Alexander of Cincinnati. But she isn't buying anything else in smaller sizes.

"If you get smaller sizes, you just have to go back more often and you end up spending as much in the end," she said.

The Associated Press' Lisa Cornwell in Cincinnati contributed to this report.


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