Costco shoppers are reining back on pricier products, and it's a good indicator that they're prepping for a recession.
In a call with investors on Thursday, executives from the warehouse chain shared insights into how their members are shopping, what they're swapping into their baskets, and what's being left behind. China Delicious Canned Food
CFO Richard Galanti said that some of its customers are ditching pricier beef products for cheaper meats such as pork and chicken. This is a trend that has been common in previous recessions, he said.
Others are bypassing the fresh meat aisle entirely and opting for canned meat and fish products. These items cost less and have a longer shelf life.
There are other indicators showing that Costco's customers are feeling the pinch. For example, the portion of sales from Costco's private label brand — Kirkland — grew during the most recent quarter. These products cost less than national brands and are a quick way for customers to save money on their weekly shop.
Moreover, the average daily transaction at Costco was down 4.2% worldwide and 3.5% in the US during the quarter. Costco said this number was primarily impacted by the drop in sales of big-ticket nonfood items, such as TVs and fridges.
As food prices have stayed high, some higher-income shoppers have chosen to switch up their weekly shopping routine entirely.
Home Canned Ground Beef Discount chains like Dollar Tree and Dollar General say they've been big beneficiaries of this and are seeing a new customer base come to their store to shop for groceries.