High gas prices result in less money to spend on food
April 16, 2008
by FoodBusinessNews.net Staff
SCHAMBURG, ILL. — Consumers spent 12% to 16% of their weekly spend on gas in 2007, a percentage that is expected to increase to 19% as gas prices continue to rise, according to The Nielsen Co. Overall, this means consumers have less money to spend on food and groceries.
"With gas prices expected to hit $4 per gallon this year consumers will be spending nearly a fifth of their household budget on gas," said Todd Hale, senior vice-president of consumer and shopper insights with Nielsen Consumer Panel Services. "That kind of increase has a direct impact on what they can afford to spend and is something retailers will need to address."
While convenience stores are by far the preferred place for consumers to buy their gas, warehouse clubs and grocery stores also attract some consumers. Consumers also are going to such stores more often as there has been a small change in the number of average weekly gas trips as prices rise. In addition, some convenience stores are appealing to consumers with a stronger focus on food service and meals consumers might otherwise take to fast-food and causal dining restaurants. Retailers also are offering low gas prices or gas discounts based on in-store purchases as a way to reduce costs and build shopper loyalty, Nielsen said.
"Consumers tell us they are combining errands and trips, eating out less and doing more things at home to counterbalance rising gas prices," Mr. Hale said. "Nevertheless, the amount of money spent on gas each week is still taking a huge bit out of consumers’ budgets."