For years, eating at home was one of the best ways to save money on food. But food inflation has become a very real issue for families in the United States. In fact, the cost of food at home increased by 13.5% in 2022—the largest 12-month increase since 1979.
To further complicate matters, a new study shows that dollar stores are now the fastest-growing food retailers in the U.S. limiting families’ access to fresh food—especially when these retailers are their only options for groceries.2 In fact, as many as 54 million Americans live in areas with low access to food, according to the US Department of Agriculture (USDA).
“With inflation leading to tightened wallets, parents are seeking out smarter ways to spend and save across retailers and brands,” says Jean Ryan, a retail analyst and vice president of strategic advisory for Daymon. “While the need to save is a key purchasing driver, parents are not looking to compromise on the health, lifestyle, and dietary needs of their families.”
If this scenario resonates with you—wanting to save money on groceries without compromising on nutrition—keep reading. Below, we not only take a closer look at the study on dollar stores but also provide tips on how to shop for groceries on a budget.
Dollar Store Grocery Shopping On The Rise
Dollar store grocery shopping is not new, but it is on the rise. According to the study, which was published in the American Journal of Public Health, dollar stores nationwide were responsible for about a 2.1% share of household food purchases as of 2020. What’s more, in rural and low-income areas, people tend to spend more than 5% of their food budget at such retailers.
While dollar stores are certainly filling an important need, researchers indicate that this trend to get groceries at dollar stores could impact a family’s nutrition goals—especially since the food and beverages stocked by dollar stores tend to be lower in nutrients and higher in calories. These stores also often lack fresh produce and meats.
The researchers also found that as a family’s income decreased, the share of food they purchased at dollar stores increased. For this reason, learning to shop on a budget—and stick to a budget—is increasingly important when trying to meet your family’s nutritional needs.
How to Shop for Groceries on a Budget
When it comes to shopping on a budget, it’s important to note this is not going to look the same for every family, says Kristi Ruth, RD, CNSC, LDN, a registered dietitian with Carrots & Cookies. Not only does each family have different nutritional needs and goals, but they also may have different options for where they can shop for food. Some may be limited to dollar stores in their area, while others might have access to a number of different retail options.
“[Plus] high grocery costs can put a lot of pressure on families,” adds Ali Bandier, MS, RD, CDN, a registered dietitian and founder at Senta Health. “Parents want the best for their children, but it is important for them to remember that healthy eating doesn’t have to be expensive. There are plenty of budget-friendly options…if they know where to look and how to plan their trip.”
Here are some general tips on how to stretch your dollar when shopping for your family.
Christy McMullen, vice-president of Summerhill Market, estimates her family-run business spends about $1 million per year on fees to process credit card transactions. It’s a big cost in the grocery business, which already operates on razor-thin profit margins, but as of next Thursday, the chain of four upscale Toronto grocery stores could choose to pass the “swipe” fees along to customers as a surcharge.
That’s an option McMullen said she cannot take.“It’s not something that you can pass on to your customers. They would go somewhere else,” she said. “It would be another reason for them to go to the big chain rather than the independent.”
As part of a settlement this year of a class-action lawsuit over what are known as interchange fees, Visa and Mastercard agreed to let Canadian merchants apply an extra fee at checkout for the use of credit cards under either of their brands. That change goes into effect next week.
But some small business owners and advocates for retailers say this is not a workable solution to the problem they face when customers pay with plastic, specifically credit cards. (Retailers say the cost of offering debit as a payment option is much lower.)
“Telling retailers to charge customers? That’s not an answer. That’s not anything,” said Giancarlo Trimarchi, managing partner at Vince’s Market, an independent chain of four grocery stores near the GTA.
Instead, they want the federal government to live up to a promise it has made for years, starting with the 2019 election campaign, to reduce credit card transaction fees.
Ottawa has said it wants to ensure small businesses pay similar rates as large businesses (that in some cases have negotiated lower rates with the credit card companies). It held a consultation last year on lowering the average overall cost of such fees for merchants.The consultation wrapped up in December, but small business and retail lobby groups worry that momentum on the issue has died.
“The government has put this file on hold for many years despite repeated promises to small business owners that they’re going to do a further reduction in credit card processing fees,” said Dan Kelly, CEO of the Canadian Federation of Independent Business. “This file seems to be very much at the bottom of the government’s priority list at the moment.”
The two major credit-card companies, Visa and Mastercard, set interchange fees — these vary depending on the type of credit card and can be significantly higher for premium cards associated with reward points programs — but the issuing banks also get a portion of the fees paid by merchants.
In 2020, under a voluntary deal with the federal government, the credit card companies agreed to drop the cost of consumer credit card transaction processing fees to an average of 1.4 per cent (this came down from 1.5 per cent under a previous voluntary agreement).
But as credit card use for payment soared during the pandemic, when consumers spurned cash and purchased more online, retailers say that’s still a hefty price to pay.
As a rough estimate based on the total volume of credit card transactions in 2020 (about $570 billion, according to Payments Canada), merchants would have paid almost $8 billion in credit card processing fees.The retail lobby groups say those numbers were likely even higher in 2021 as the economy recovered after the first year of the pandemic and consumers resumed travelling, dining out and other spending.
“We’ve continued to push for further reductions (in the interchange rate) particularly because we saw such a massive migration away from cash as a result of the pandemic,” said Gary Sands, senior vice-president at the Canadian Federation of Independent Grocers.
“The volume of payments (with credit card) has increased so significantly that it’s just eroding the bottom line of many businesses.”The 2022 federal budget said consultations on the topic continue but the lobby groups say they have not heard anything further from Ottawa.
“The government is committed to lowering the cost of credit-card fees in a way that benefits small businesses and protects existing reward points for consumers,” Adrienne Vaupshas, a spokesperson for Minister of Finance Chrystia Freeland, said in an email.In the meantime, passing on a surcharge to customers will likely be a tough sell for many businesses as Canadians grapple with the effects of soaring inflation.
“We’ve never seen surcharging as the solution to this problem,” said Karl Littler, senior vice-president at the Retail Council of Canada.There have long been exceptions to the previous prohibition on surcharging. For example, some public institutions such as universities and utilities have been able to impose fees for credit card use.
Telecom provider Telus recently told customers it plans to charge a fee for payments made by credit cards and Littler said he could also see it working for smaller merchants who have ongoing and face-to-face relationships with customers, who might sympathize with the costs the businesses incur.
“But I don’t see it working at scale,” he said. “I don’t expect there will be broad adoption of surcharging by Canadian merchants.” Kelly said the CFIB does support retailers having the option but suspects uptake will be limited. He said a poll of 3,914 CFIB members conducted in early September indicated 19 per cent of respondents plan to use the new power.
A Visa spokesperson said the company is not in favour of surcharges, stating in an email, “We believe that the simplest, most economically efficient and consumer-friendly approach is for merchants not to impose surcharges on consumers for using their cards.”
Emilija Businskas, vice-president, communications for Mastercard in Canada, said the option to charge customers a surcharge will give merchants flexibility. On the broader issue of interchange fees, Mastercard “remains committed to building a strong, innovative payments system in Canada,” she said. “This includes our voluntary agreement with government which brings a thoughtful approach to the cost of acceptance for all.”
Mathieu Labrèche, a spokesperson for the Canadian Bankers Association, declined to comment for this story.
Christy McMullen, vice-president of Summerhill Market, estimates her family-run business spends about $1 million per year on fees to process credit card transactions.
It’s a big cost in the grocery business, which already operates on razor-thin profit margins, but as of next Thursday, the chain of four upscale Toronto grocery stores could choose to pass the “swipe” fees along to customers as a surcharge.
Does swiping your plastic (or metal) credit card sometimes seem more like you’re spending funny money than actual currency? It’s a normal feeling. And research confirms that people do in fact spend more money — often, substantially more money — when they make purchases on a credit card instead of using cash.
It makes sense. Cash is a tangible piece of paper with value attached to it. When you spend it, you have less of it in your wallet. You see this and process it. But with the widespread adoption of credit cards, mobile wallets and peer-to-peer payment systems like Venmo, transactions are less transparent.
Will that make you spend more? Here’s what the studies say, and how you can make sure you’re in control of your spending.
The psychology of credit card spending
It’s easy to convince yourself, without even knowing it, that you’re not spending “real” money when you charge on your credit card. And technically, that’s correct.
“In fact, you’re not really spending money — you’re borrowing money,” writes author and certified public accountant Michele Cagan in her book, “Debt 101.” “You know that you’ll have to pay the bill eventually, but the promise of small minimum payments can make purchases seem like bargains.” Unless you pay back the purchase immediately, you won’t feel the pain of the bill for basically a month.
Multiple behavioral economics studies back this up, including a now-classic study by Drazen Prelec and Duncan Simester, professors at Massachusetts Institute of Technology, in which randomly selected participants were offered the opportunity to buy highly desirable, sold-out tickets to a professional basketball game. “Unless you pay back a credit card purchase immediately, you won’t feel the pain of the bill for basically a month.”
Half the participants were told that they would have to pay cash for the tickets. The other half were told that they would be required to pay by credit card. Those who were told they would have to pay by credit card were willing to pay more than twice as much on average as those who were told that they would have to pay by cash. In other words, study participants were willing to pay a 100% premium for the opportunity to buy now and pay later.
Another often-cited study is one conducted by Dun & Bradstreet, in which the company found that people spend 12%-18% more when using credit cards instead of cash. The Federal Reserve Bank of Boston recently found an even sharper disparity between cash and non-cash transactions. According to a 2016 report from the bank, the average value of a cash transaction was $22, compared with $112 for non-cash transactions — a 409% jump.
Older studies and real-world data points have also tended to support this general idea through the years:
McDonald’s once reported that its average ticket was $7 when people used credit cards versus $4.50 for cash.
A published paper from MIT economist Amy Finkelstein found that U.S. states with highway tolls would tend to increase that toll once they’d installed an automatic collection system, such as EZ-Pass. The study suggests that states realized they could charge more because consumers don’t “feel” the electronic transaction in the same way they would by parting with “real money.”
If you’ve ever shopped at Amazon at 2 a.m, you probably know this all too well. Since studies have shown that consumers are willing to spend more when they charge their purchases, it makes sense that credit cards are ripe for impulse purchases….To be continued..
Shares of Signify Health skyrocketed Monday after the Wall Street Journal reported e-commerce giant Amazon is reportedly looking into acquiring the at-home health services provider, joining a crop of other corporate giants—including CVS and UnitedHealth—in a potential bidding war that could value the firm at more than $8 billion.
Shares of Signify jumped as much as 40% early Monday to reach their highest level since July after WSJreported over the weekend that Amazon is among firms looking to strike a deal to buy Signify within the next few weeks; Signify’s market cap climbed to about $6.8 billion amid the stock surge.
Earlier this month, WSJreported CVS Health was also seeking to buy Signify, which provides its technology services to the government, insurers and private employers, after the firm started working with bankers to explore a potential sale.
In a note Monday morning, William Blair analyst Matt Larew said Signify gathers vast amounts of data on the health status and needs of the Medicare Advantage population, which would make it a valuable acquisition for any large retailer intent on diving into the demographic and broadening its reach in healthcare.
He notes an acquisition valued at more than $8 billion would imply a stock price of about $34—roughly 17% more than current levels; shares are now up 94% this year, compared to a 13% decline for the S&P 500.
A potential bid would mark only the latest healthcare play from Amazon, whose CEO Andy Jassy has made expanding into the industry a top priority: Last month, the company paid about $3.9 billion in cash to acquire healthcare technology startup One Medical.
A representative for Signify declined to comment on the potential bid; Amazon did not immediately respond to Forbes‘ request for comment. Signify stock struggled after the Dallas-based firm’s buzzy initial public offering in February 2021, when the firm raised some $564 million from investors and nabbed a market value of more than $7 billion.
Even with the Monday surge, the stock is down about 20% from its peak just days after the IPO. Earlier this month, the company laid off 489 employees across the nation as part of its plan to discontinue its episodes of care services in favor of the fast-growing and profitable home-services segment.
Signify is one of Ark Invest’s top holdings. The investment firm helmed by high-profile stock picker Cathie Wood owns a more than $200 million stake in Signify, but offloaded roughly $12 million worth of shares last week. It also holds a large position in Teladoc.
Signify Health, Inc. is a healthcare platform that leverages advanced analytics, technology, and nationwide healthcare provider networks to create and power value-based payment programs. Its solutions support value-based payment programs by aligning financial incentives around outcomes, providing tools to health plans and healthcare organizations designed to assess and manage risk and identify actionable opportunities for improved patient outcomes, coordination and cost-savings.
The company operates through two business segments: Home and Community Services and Episodes of Care Services. The Home & Community Services segment focuses on reaching and engaging populations at home. The Episodes of Care Services segment manages episode-based payment programs. The company was founded in 2009 and is headquartered in Norwalk, CT.
Signify Health ’s market capitalization is nearly $5 billion. The Journal reported that Signify was for sale in an auction that could value it at more than $8 billion. Bids are due around Labor Day, the people told the Journal, but it’s always possible a deal could be reached before then.
Signify shares were soaring 36.9% to $29.02 on Monday. Representatives for Signify Health didn’t reply to requests for comment from Barron’s. Amazon said in an email to Barron’s that “we don’t comment on speculation.” UnitedHealth said it doesn’t “comment on rumors and speculation.”
UnitedHealth has submitted the highest bid in excess of $30 a share, Bloomberg reported, citing people with knowledge of the matter. Amazon’s offer was close behind.
Over the past two years, the world has changed in ways it never has before, and the franchise industry is no exception. It has taken a while, but following the challenges of the Covid-19 pandemic, 2022 is positioned to be a massive year for franchise development and sales growth. First, as we wrap up 2021, let’s take a look back at how the franchise industry has adapted to the ups and downs of the past year.
2021: A Light at the End of the Tunnel
Following the unprecedented challenges of 2020, this year saw a steady return of in-person events and the rollout of Covid-19 vaccines. Several people and industries started to see a much-anticipated comeback and recovery in the beginning of 2021.
There were certainly still some challenges for franchisors especially on the retail and restaurant side. This included geographic limitations, where certain areas were still heavily locked down and others weren’t, forcing some restaurants to operate without full indoor dining and some retail stores to operate with restricted capacity.
As the year progressed, more people became comfortable with traveling and spent more money at businesses. It also made it more challenging for businesses in certain industries to satisfy this pent-up demand successfully due to complicated in-person requirements. Additionally, business owners have had to adapt their operations to combat the ongoing labor shortage, resulting staffing issues, supply chain interruptions and product shipment delays.
Much has changed for the foreseeable future, there’s no doubt. That said, in 2021 franchise brands have continued to rise above the challenges and seen growth in their systems overall.
2022: An Opportunity for Franchising to Emerge Stronger Than Ever
2022 will likely be a tremendous year for the franchise industry as a whole with a majority of individual brands set to prosper both in terms of system wide sales and franchise development. Many franchisors have been reporting increased sales in 2021, and there is no reason to believe that trend is going to change in 2022. Additionally, the International Franchise Association predicts franchise development is also on the rise with 26,000 franchised locations expected to be added in 2021 and franchise employment projected to grow by more than 10% to nearly 8.3 million workers.
The sector that is positioned better than any other is home services. With more people spending increased time at home and saving money on travel, the demand for home services and home improvement has skyrocketed since the start of the pandemic. As a result, more and more savvy entrepreneurs are recognizing the uniquely lucrative opportunity to enter the home services space.
Some of the other trends that will likely continue in the franchise industry include prospects investing in concepts sight-unseen. Candidates are more comfortable now meeting online than ever before, and development teams have learned how to adapt and appeal to a prospect’s comfort level.
Technology, of course, has also brought on several changes to the industry. Whether it was Zoom meetings, curbside pickup or QR codes, these new digital tools have helped businesses get by and drastically changed the landscape of the industry. These will all continue to be a huge trend in 2022 as brands adapt to challenges including the evolving workforce and supply chain issues.
Overall, it has been a long and difficult time, but the franchise industry has made it through to the other side. Now, as more and more people look to take control of their destiny through entrepreneurship and customers return to their pre-pandemic habits, it is an incredibly exciting time to be a part of the franchise industry.
Economists at Goldman Sachs hiked their inflation projections this weekend and warned clients that recent strong price spikes seem similar to those that preceded record inflation decades ago, joining other experts in forecasting inflation will last longer than previously expected.
In a note to clients Sunday night, Goldman economists said they expect consumer prices to rise more quickly later this summer as transportation and health insurance costs continue to surge, pushing core inflation, which excludes volatile food and energy prices, from 6% in May to 6.3% in September.
Goldman expects health insurance and automobile prices—two of the largest contributors to inflation during the pandemic—should start “outright” falling by the end of this year as Covid-era growth begins to subside, pushing core inflation down to 5.5% at year-end and 2.4% in December 2023.
However, the economists also acknowledge core inflation has vastly outperformed expert projections this year, consistently rising more than expected over the last six months.
They note the surprise readings are beginning to rival those seen in the 1960s and 1970s—when long-lasting price spikes of more than 10% (solidly higher than the latest reading of 8.6% in May) contributed to prolonged periods of weak economic growth and sparked a decade of lackluster stock-market returns.
In a weekend note to clients, LPL Financial chief economist Jeffrey Roach was more bearish, saying the surge in travel-related demand is a “major concern” for inflation as housing, restaurant and accommodation prices reach new highs.
“Consumers may have to live in a world where inflation consistently runs hotter than the previous decade,” Roach said, citing concerns from central bankers like European Union’s Christine Lagarde, who last week warned there are “growing signs”—including the ongoing war in Ukraine—that suggest “supply shocks hitting the economy could linger for longer.”
“Policymakers must come to grips with a real possibility that inflation rates will not come down to their preferred targets for many years,” says Roach, adding the tight labor market is another uncertainty that could keep inflation above the Fed’s long-standing 2% target.
Inflation ran rampant in the 1970s as multiple energy crises pushed oil prices up as much as 400%, all while central bankers prioritized efforts to improve the labor market—even if it meant risking further price spikes. It wasn’t until Paul Volcker took office as Federal Reserve chairman in 1979 that the Fed pivoted to fight inflation, and though the efforts were ultimately successful, they also yielded a recession in 1982..
To help ease inflation, government is expected to possibly announce lower tariffs on certain Chinese goods, including clothing and school supplies, as soon as this week. However, some experts worry the move does nothing to address domestic supply chain issues driving up costs. The decision “probably won’t move the needle dramatically on inflation,” analyst Adam Crisafulli of Vital Knowledge Media said in a Monday email, though he says “aggressive” discounts set to start this month at major retailers like Walmart and Target could prove “far more important.”
The Fed’s inflation-fighting interest rate hikes this year have tanked stocks and sparked growing fears of a recession. Major stock indexesplunged into bear market territory last month ahead of the central bank’’s largest interest rate hike in 28 years, and the gloomy sentiment has ushered in waves of layoffs among recently booming technology and real estate companies.
“We don’t believe the Fed can stop the issues that are causing inflation on the supply side without absolutely wrecking the economy, but at this point, it looks like they are resigned to the fact that it must be done,” says Brett Ewing, chief market strategist of First Franklin Financial Services.
Photo: d3sign / Getty Images
