After his company released data indicating poorer Americans are running out of money at the end of the month, Dollar General CEO Todd Vasos said that customers informed him that they are increasingly worried about the impact inflation has on their finances.
According to the Financial Times, Dollar General operates by selling a wide range of goods at low prices and is located in rural towns or low-income communities. According to their sales data, their sales numbers took a significant hit towards the end of the month, which the retailer attributed to families facing a lack of funds.
Vasos continued, “The majority of them state that they feel worse off financially than they were six months ago as higher prices, softer employment levels and increased borrowing costs have negatively impacted low-income consumer sentiment.”
“What’s different from prior economic periods where consumers are under duress is we’re not seeing the trade-down customer [more affluent shoppers who would visit Dollar General to purchase lower-priced items] as much as we have in the past,” Joe Feldman, Senior Managing Director and Assistant Director of Research at Tesley Advisor Group, told Fast Company. “That customer is shopping at Walmart and online more frequently. There are a lot of other places now that the middle- to slightly more affluent consumer can shop at, and I think that’s what’s driving the pressure.”
According to Rob Rich, the Director of the Center for Inflation Research at the Cleveland Fed, high prices will persist unless people refuse to shop.
“Since the pandemic, and since we started raising interest rates, we’ve actually seen the inflation rate slow. Now…it doesn’t mean that prices have fallen. What it means is prices are not growing as quickly as they were before.”
Rich continued, “Episodes where prices actually fall can be really, really damaging to an economy,” Rich said. If consumers expect prices to fall further, they hold off on purchasing and pull back on spending, which can hurt businesses and impact hiring. Deflation is also a negative for contracts like mortgages and other debt instruments, he explained because the amount of money borrowers have to pay is fixed, and if prices are falling, it becomes more of a burden. “While everyone may initially think, ‘Oh, yeah, let’s let prices all fall,’ that can actually be very problematic for an economy.”
RELATED CONTENT: Vice President Harris Takes on Big Corporations: Asserts Federal Ban On Price Gouging
Source: Black Enterprise
