Since the day I joined Avvo, Avvo attorneys have been telling askers not to pay since Palmer has a history of never suing.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
The letter you received, a civil demand letter, is authorized in the Penal Code (section 490.5). They are all bark and no bite, however.
I have yet to hear of anyone actually being sued for ignoring the demand letters in these situations. That particular law firm is in Florida and this is all they do - send out millions of letters per year, hoping people will pay. They get a cut and the rest goes to the store.
If you don't pay, the Code says the remedy is to sue you in small claims. Attorneys cannot be involved in small claims cases unless they are a direct party. What does that mean? An attorney cannot sue you in small claims on behalf of the supermarket. In fact, that law firm must associate with a lawyer in California so they can even send those letters. That one lawyer is listed as "of counsel" to the Florida firm. They aren't going to be suing you over shampoo and toothpaste.
If you read further on avvo, you'll see the overwhelming, if not unanimous suggestion is to ignore the letters.
If you don't pay, it will not cause criminal charges to be filed (they couldn't now anyway since it's beyond the statute of limitations), nor would it result in a mark on your criminal history. Similarly, it's not a debt you owe, so it cannot impact your credit rating.
The above answer is for general information only and is based on the information you posted. Every case is fact dependent, so to get a thorough analysis of your situation, you will need to consult face to face with an attorney licensed to practice in the jurisdiction where the incident took place. Do not conclusively rely on any information posted online when deciding what to do about your case.