The high cost of energy and food is driving many consumers into discount stores as they seek ways to make their dollars go farther.
Operators, including Aldi, Save-a-Lot, Target, Wal-Mart and other chains and independents that emphasize low prices, are seeing new customers shopping in their stores as the middle-class deals with much higher prices in the current market.
According to the U.S. Department of Labor, food prices jumped roughly four percent for the 12-months ending June 2007. Staples such as eggs (+10.5 percent) and orange juice (+33.2 percent) have seen some of the biggest increases.
Mike Abernathy, owner of Mike's Discount Foods, told the Minneapolis Star Tribune that his business is up 25 percent in recent months. Mr. Abernathy's customers save at his stores because he specializes in selling national brand items that are close to the expiration date.
Tuesdays are very busy at Mike's because seniors get to take an extra 10 percent off their shopping bill.
"Older customers tell their middle-aged kids where they got a great deal on blueberries," said Mr. Abernathy, "and pretty soon they're shopping here, too."
Discussion Question: What economic factors do you see as weighing the heaviest on consumers? Do you see consumers migrating to discount price retailers to save money? What does this mean for the retailers attracting these new customers and the stores where these consumers previously shopped? What do you expect to happen after prices eventually moderate again?