Some consumers are cutting back on spending but big drugstore and grocery players said on Thursday that they aren’t being hit by a slowdown just yet.
 
Drugstore chain Walgreen Co is concerned about consumer spending slowing down amid high gas prices, the credit crunch and real estate market issues, President and Chief Operating Officer Greg Wasson said at a Goldman Sachs conference.
 
Still, while “we’re not an industry that’s recession-proof,” the sector has been “somewhat recession resistant” in the past, Wasson said.
 
Safeway Chairman and Chief Executive Steven Burd told the Goldman crowd that higher food costs and the credit market squeeze have led to some uncertainty, but Safeway hasn’t seen fundamental shifts in behavior.
 
And Whole Foods Market Inc Co-President and Chief Operating Officer Walter Robb said the natural and organic grocer is keeping an eye on the macro environment. While its shoppers have traditionally been more resilient, the current situation may be a new one, Robb said. He added that he’s not sure it’s totally played out yet.
 
If anything, sales growth could soften for a while but shouldn’t lead to an earnings decline, Safeway’s Burd said. His company is working on keeping costs under control, partly in anticipation of the economic uncertainty, he said. For example, as the price of milk goes up, shoppers buy less of it. Safeway won’t increase the number of hours employees in the dairy department are scheduled to work if the only reason sales are going up in that part of the store is the inflated price, Burd said.
 
At Walgreen, items like over-the-counter drugs and shaving supplies are selling well. If shoppers do decide to spend less, Wasson expects more costly items, like fragrances, could take a hit. Historically, though, shoppers turn to drugstores when they want to cut down on longer trips to big box retailers. Walgreen doesn’t really plan for a consumer slowdown, but it’s certainly ready to react if need be, Wasson said.