As its stock lost nearly 20% of its value this week, Dollar General’s CEO Jeff Owen said in a call to investors many of its customers have been forced to resort to food banks.
The news came as other major retailers have reported seeing a major shift in consumer spending habits.
"Unfortunately, our customers are saying they're having to rely more on food banks, savings and credit cards and as we all know, credit card rates are at an all-time high," Owen said.
Describing Dollar General's core customer, Owen continued: "What we're seeing her do is really rely more, in the shopping behavior, buy fewer items per basket. We're seeing her really utilize that dollar price point, and we're very pleased that we still offer that, and then we're also seeing her buy closer to payday and the first of the month."
Owen noted that increased inflation coupled with reduced pandemic-era government benefits have resulted in declining food sales.
"Food inflation continues to persist and even though it's moderated somewhat, if you think about the two-year stack, it's almost 20% and our customer certainly is seeing that pressure," Owen said. "When you think about the child tax credit and the removal of that and how that impacted her tax refund, that's an incredible buffer for her that quite frankly surprised her on the level of refund she did not receive, and in some cases, some of our customers are saying that they're even having to pay taxes this year, which is something that they typically don't have to do."
In 2021, the child tax credit went from $2,000 per child to $3,000 per child for children 6 years old and above, and to $3,600 per child for children under 6. Parents received an expanded child tax credit in 2021 as part of pandemic relief, but the expanded credit lapsed despite efforts among Democrats.
Owen also noted that in February, a pandemic-era emergency order that gave families the maximum amount of benefits each month through the Supplemental Nutrition Assistance Program expired.
SEE MORE: What is causing the rise of grocery prices around the US?
Although overall inflation has relaxed from a high of 9.2% in June, food costs have outpaced other items. As of April 2023, food costs were up 7.7% in the prior 12 months.
In recent weeks, Target, Costco and Macy’s all reportedshifts in consumer spending behaviors. Costco, for instance, reported a shift in customers purchasing pork and poultry instead of beef, which generally happens during times of economic downturns.
Macy’s and Target said that demand for discretionary items weakened in March.
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