Is the U.S. consumer destined to become as miserly as his German counterpart?
Are we all destined to be shopping in discount stores in a few years, living as cheaply as our slow-growth economy and our meager Social Security benefits will allow? Experts say the U.S. recession, while easing, has changed shopper behaviors. Dollar stores and hard discounters are on the rise and the traditional grocery market is stumbling along. Even upmarket Wegmans has again offered a list of grocery items with a seasonal price freeze this fall, including bananas at 49 cents per pound.
It's tough out there. Sales at McDonald's have pulled back of late because of thrifty consumers.
The U.S. Department of Agriculture's Foreign Agricultural Service recently issued a retail report on Germany, and it was eye-opening to see the influence of hard discount stores in that country. We all know Aldi in the U.S., as it has expanded to 1,200 stores in 32 U.S. states. Still, it enjoys a small market share of 2% or less in the markets where it operates.
In Germany, Aldi alone has a substantial 13.6% market share; discounters as a group enjoyed 62 billion euros in sales in 2011, compared with 49 billion euros for supermarkets and 34 billion euros for hypermarkets.
From the USDA FAS report:
Germans are devoted to their discounters and the country has, globally, the highest share of discounters in food retailing. This is one reason why margins at the retail level are so thin.
Our economy needs to accelerate opportunities for all, especially young adults who are hitting the pause button on marriage, family and home ownership in the face of student loan debt and the Great Recession.
We hope for a great awakening and a new vitality, an echo boom from the 1980s.
But, in reaction to government deficits and personal debt, we may become increasingly hostile to extravagance, just as history has made our German friends.
We will be off to Aldi, happy enough with the sharp discounts on packaged goods to overlook their often disappointing concessions to fresh produce quality.