Home Economics

Winter 2025
By Ty Burke

As anyone who has visited a Walmart Supercenter during a Black Friday sale can tell you, just about everyone loves a deal. Those carts stacked with discounted cleaning supplies and bulk toilet paper are more than just obstacles in a crowded parking lot. Stockpiling household goods is a strategy that shoppers can use to keep their overall spending low. However, stockpiling requires “investment” in household working capital — the value of stockpiled goods and cash needed to finance shopping trips.

For households that stock up on goods at the right price, the gains can add up quickly, says Rice Business economist Stephanie Johnson. Johnson likens the savings achieved from strategic shopping behavior to the interest earned in a savings account — but at an average of 54% for the typical working capital investment, the returns far outpace any interest you could earn. The amount is also far higher than the average annual return of 8% achieved by the S&P 500, a stock market index that tracks 500 of the largest companies in the United States.

While stock market investments always carry inherent risks, the returns from buying discounted products are known at the time of purchase and are nearly guaranteed. However, unlike a savings account, the returns decline with the amount invested.

The items that you have in your fridge or in your pantry can be a significant form of wealth that is not captured in widely used measures.

Traditionally, wealth is calculated by adding up the total value of assets such as real estate, savings and equities like stocks. But that calculation fails to capture what’s in a household’s cupboards. For those in the lowest quintile of annual household income, these goods are a significant form of wealth and likely the most effective way for them to generate returns with their money.

“A large number of American households have very limited financial assets, but all households have at least some consumer goods,” says Johnson. “You can stock up on things like dry grocery and frozen items, cleaning products, or canned food, and, to a lesser extent, yogurt, cheese or eggs. The items that you have in your fridge or in your pantry can be a significant form of wealth that is not captured in widely used measures. … What’s important to understand is these physical goods are also a form of wealth. Even if they cannot easily be resold, households can reduce spending in times of financial distress by drawing from their stockpile.”

Johnson, along with co-authors Scott Baker of Northwestern University and Lorenz Kueng of the Swiss Finance Institute, recently published these findings in the Journal of Financial Economics. 

Stephanie Johnson is an assistant professor of finance at the Jones Graduate School of Business. A version of this story originally appeared in Rice Business Wisdom.