The Earnest files: US consumers seek value as price pressures continue

Exclusive credit and debit card transaction data from Earnest Analytics reveals how inflation has reshaped consumer spending behavior related to food. Over the last quarter, we saw consumer spending adjust in response to the relative affordability of food. Dining out saw a significant decline, with consumers favoring more affordable alternatives due to financial pressures. Retail options (cooking at home) became the preferred choice.

Restaurants, primarily those with higher cost structures such as casual restaurants, experienced reduced activity. Numerous earnings reports specifically mentioned declining demand from lower-income demographics. Conversely, retailers capitalized on changing consumer habits by enticing larger purchases, benefiting from lower food-at-home inflation and promotional activities.

Warehouse clubs and discounters thrived as value-driven options, expanding rapidly and reshaping the retail landscape. Traditional retailers responded by enhancing offerings, but competition remains fierce.

Overall, while the retail sector continues to evolve in terms of visit frequency and baskets, restaurants need to find ways to bring the value of the dining experience back to the consumer.