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Amazon's new budget line of food products suggests things aren't getting better for the American shopper

Sep 12, 2024, 00:36 IST
Business Insider
Amazon's new "no-frills brand" leans into a trend that other retailers have successfully tapped.Alex Bitter/BI
  • Amazon's new bargain grocery brand suggests shoppers will be pinching pennies for a while.
  • While things aren't worsening significantly for low-income people, they aren't improving quickly.
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Following the lead of grocery retailers like Walmart and Target, Amazon has introduced a new bargain-priced private-label food brand "to help grocery budgets go further."

But while the announcement, along with one about expanded savings for Prime members at the company's Fresh grocery stores and online, seems a boon for shoppers, it also suggests there will be no let-up for a while for money-stressed American consumers.

Recent earnings from Walmart and Target were bright spots in an otherwise challenging consumer landscape, but weaker results from dollar stores indicate that lower-income households, in particular, aren't in great financial shape.

And though government data showed inflation continuing to cool in August, many key prices remain high as increases over the past couple of years stay locked in.

In other words, although the picture isn't getting significantly worse for American shoppers, it's not exactly improving quickly.

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Amazon's new "no-frills brand," Amazon Saver, leans into a trend that Target has tapped recently with its Dealworthy line of products, while Walmart's long-established Great Value brand is bought by 86% of households, according to Numerator data.

Roughly a quarter of shoppers surveyed by Numerator say they buy store brands as a way to save money.

Private-label groceries have been a source of some relief for customers as retailers have been able to bring prices down more quickly compared to national brands. Big names are paying attention, though — PepsiCo recently admitted the company's profit-taking may have gone a bit too far.

Still, the clock is ticking for more substantial fixes.

Dollar General CEO Ted Vasos said about 30% of respondents to a company survey have maxed out at least one of their credit cards, while 25% expect to miss a bill payment in the next six months.

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"The majority of them state that they feel worse off financially than they were six months ago," he said.

Prime members (who can afford the monthly fee) may find Amazon's moves welcome news. But retailers and customers are likely to continue to have to make more room on their shelves for private label brands until the economic picture improves.

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