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Gas Prices Impact Consumer Spending

NEW YORK -- The high price of fuel is deeply affecting shopping behavior and expenditure, with a higher proportion of poor households being more deeply affected than affluent households (23 percent vs. 14 percent), according to report by ACNielsen.

Poor households are using coupons more often, buying less expensive brands of groceries (20 percent vs. 10 percent), opting for a lower grade of gasoline (19 percent vs. 12 percent) and reducing spending in other areas "to a great degree" (15 percent vs. 5 percent.)

Nine percent of affluent households compared to 6 percent of poor households are shopping more in warehouse club stores and on the Internet (7 percent vs. 3 percent). Not surprisingly, the affluent segment has the highest percentage of households (26 percent) claiming that higher fuel prices have no impact on their driving and spending habits.

Jay Ricker, president and CEO of Rickers Oil Co., agrees with the study's findings and said that since Katrina people are not spending as much money at the pumps. "I believe people are coming to fill up more frequently, but spending small amounts each time," he told CSNews Online. In addition, Ricker said that sales on premium gas declined drastically.

Todd Hale, ACNielsen senior vice president of Consumer Insights, said that gas prices have gone up even further since the survey was conducted in June and July: "With the added economic uncertainty created by the disaster in New Orleans and other parts of the Gulf Coast, you can be sure that even more people are now looking for ways to conserve fuel and reduce overall spending," Hale said.

However, Ricker remains optimistic and stated that gas prices, snack and beverage sales are going back to where they were pre-Katrina.

As the impact of Hurricane Katrina ripples through the economy, putting further pressure on the price of fuel and other items, Hale said the consumer packaged goods industry needs a multi-faceted response. "The most important need right now is for continued donations of products and cash," he said.

According to Hale, the long-term impact of the Hurricane will provide opportunities for one-stop-shop retailers like super centers and warehouse clubs to win the ongoing business of customers visiting their stores for the first time.

"Supermarket operators will be able to play up the convenience of their store locations and the value of their take-home meals," Hale said. "The fact that many consumers are doing more at home should spell opportunity for manufacturers whose products enhance the at-home entertainment experience."

The ACNielsen survey was conducted among 37,000 members of its Homescan consumer panel. Currently totaling 91,500 households, Homescan is in the middle of its "Mega Panel" initiative which will increase the panel to 125,000 households by the end of October.
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