In various Q1 earnings calls held on Tuesday, executives emphasized that American consumers are placing a high value on affordability, actively seeking discounts, and opting for lower-priced options when possible.
Amazon CEO Andy Jassy informed shareholders that “Customers are shopping, but remain cautious.”
Everyday low pricing
To meet the needs of these cautious consumers, Jassy highlighted the importance of “providing everyday low prices in this uncertain economic climate.”
“Everyday low prices” is a common industry term for a pricing strategy that ensures consistently low prices without relying on promotional activities—and this concept also emerged in another major company’s earnings call.
McDonald’s CEO Chris Kempczinski stated, “Given the challenging industry environment, we recognize that our customers are now more than ever seeking reliable everyday value.”
He also mentioned that McDonald’s is “collaborating closely with our local franchisees to strike a balance between menu pricing decisions and implementing the right affordability strategy.”
Less snack in their pack
Mondelez International, the company behind Oreo, Ritz, and Clif, highlighted a different consumer trend: opting for smaller package sizes.
“Consumers in many markets are increasingly price-sensitive, leading them to choose smaller pack sizes in both Biscuits and Chocolates,” noted CEO Dirk Van De Put during an earnings call.
The snack giant is also witnessing a “significant shift in sales” towards “club stores, dollar stores, and emerging e-commerce platforms,” with lower-income consumers feeling pressured and reducing their category purchases.
Homebodies
Coca-Cola CEO James Quincey pointed out that the company is observing “compressed purchasing power in lower-income segments, with a noticeable behavioral shift towards seeking value.”
This shift is evident in a preference for at-home purchases.
“I believe this has resulted in a slight shift towards more at-home volume versus away-from-home,” he remarked.
“Occasional customers” pull back
Even coffee enthusiasts are feeling the financial strain, with less frequent customers demonstrating the most significant pullback, according to Starbucks.
CEO Laxman Narasimhan mentioned, “We continue to experience the impact of a more cautious consumer, especially among our occasional customers,” who tend to reduce their visits in the afternoons and evenings.
In the upcoming months, Starbucks plans to attract these customers by expanding their product offerings, enhancing the Starbucks app, and investing in omnichannel marketing to emphasize that the best deals are available through the app.
This article was originally featured in Retail Brew.
