REUTERS/Rick Wilking
Inflation is changing shopping habits across the board, even for people with high salaries and disposable income.
Over the last year, Aldi's US stores have seen more than one million new customers, vice president of national buying Scott Patton told Reuters. Many of those new shoppers were middle and high-income customers making between $50,000 and $100,000 or more, Patton said.
"Inflation is hitting everyone so when we can be a solution for the grocery portion of that, that's important," he said.
Aldi is a discount grocery store known for its bare-bones approach to keeping costs low. Workers stock products on shelves in their cardboard packaging or on the pallets they arrived in, saving time and labor, and workers don't bag groceries either. These strategies have kept prices low and attracted budget-conscious shoppers, which increasingly include upper and middle-class customers.
Walmart CEO Doug McMillon told investors in an earnings call that the megachain is seeing changes among its customers, too.
"We're seeing more middle and higher-income shoppers choose us," McMillon said, especially for savings on"food and consumables."
Fast casual chain Chipotle is seeing a similar shift in its customer base.
CEO Brian Niccol said that the majority of Chipotle customers have relatively high household incomes and they have increased the frequency of orders in a July earnings call. He attributed the phenomenon to those customers trading in meals at higher-priced restaurants for Chipotle orders instead.
This subset of Chipotle customers is ordering burritos and bowls more frequently despite regular price increases, most recently in August. These purchasing trends are consistent with available information about Chipotle's customer base. The typical Chipotle customer is a white, married millennial between 25 and 34 years old, according to data provided by analytics firm Numerator. They're likely to have a college degree and make more than $80,000 a year.
Wealthier customers are trading down to cheaper options with sit-down dining, too. Darden Restaurants, the parent company of Olive Garden, Longhorn Steakhouse, The Capital Grille, and other chains, said that it is seeing a drop off in business among customers making less than $50,000 per year. However, the restaurant group is seeing "strength" among higher-income customers, President and CEO Ricardo Cardenas said in a September earnings call.
The majority of Olive Garden customers make more than $50,000 Cardenas said, and sales among customers making more than $100,000 are doing "very well." The proportion of higher-income customers has grown, Cardenas said, and Longhorn Steakhouse sales remain strong as the chain caters to customers with higher incomes, on average.
High-income customers often trade down to cheaper options during times of economic slowdown, so this isn't unprecedented, Edward Jones senior analyst Brian Yarbrough told Insider. Those same customers tend to trade back up to pricier options when the economy improves, though it depends on how long elevated inflation levels last, he said.
These new customers aren't likely to cause a major boom to the bottom lines of these companies, though. They're probably just enough to offset losses from low-income customers who have less discretionary income, Yarbrough said.
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