This paper investigates the food purchase behavior of low-income households across two dimensions: the types of stores they choose to shop at and the frequency of coupon usage for food purchases. Expenditure share analysis shows little difference between income groups in terms of expenditure shares across store types. The main difference occurs between metro and non-metro households. Since metro areas tend to have more grocery stores and fewer supercenters, while rural, non-metro areas tend to have more supercenters, the key result from this section is that non-metro households spend a greater share of their food budget at supercenter and warehouse club stores. We then segment consumers into coupon users and nonusers in order to better understand coupon usage behavior in the ready-to-eat (RTE) cereal market. The results indicate that white, middle-income households with a college education are more prone to redeem coupons. Households in the low-income group are less likely to use coupons, as are households in rural, non-metro areas. Surprisingly, household size is not a significant variable for coupon use in our data, although this is usually an important determinant in the coupon usage literature. Our result is plausible, however, since we use a number of demographic variables as explanatory in this analysis and these other measures may be the true determinants of coupon usage, but may be correlated with household size.


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