Consumers aren’t ready to dive in to discretionary spending at this point, although a state of equilibrium seems to be merging across the consumer packaged goods and general merchandise sectors, according to market researcher and advisor Circana.
Total retail sales in the United States across a combined view of the discretionary general merchandise and consumer packaged goods segments steadied in July, Circana noted. During the four weeks ending August 3, overall dollar sales were flat versus the same four weeks in 2023 although unit demand declined 1%.
Food and beverage and non-edible CPG sales gained 1%, with generally flat year-over-year unit performance. However, discretionary sales remained challenged, Circana pointed out, with a 3% decline in dollars and a 2% decline in units. Despite major retail promotional events, including Prime Day, consumers kept to the steady spending they have demonstrated for the past several months, according to Circana.
In discretionary general merchandise, the company added, changes are more about what consumers are buying than where. They are prioritizing products by need, Circana reported, as financial concerns and competitive product offerings across channels test brand loyalty. A significant proportion of CPG consumers are seeking value in new channels, as evident in the retail food and beverage revenue gains by clubs and dollar stores during 2024’s first half, Circana indicated. Similar club store gains in non-edible CPG suggest related behavior.
In the first half of 2024, e-commerce pure players led in non-edible CPG year-over-year dollar sales gains with club stores following, according to Circana. Club stores had the greatest year-over-year growth in retail food and beverage followed by dollar stores. In general merchandise, home hardware retailers had the biggest year-over-year sales gains through the first half of 2024 followed by e-commerce pure players, according to Circana.
“This month’s sales results demonstrate just how adept consumers have gotten at adapting their spending behavior to stick to a budget, including taking a break in some areas,” said Marshal Cohen, Circana chief retail industry advisor. “This apparent vacation from spending is having an impact across discretionary categories. The long-standing strong performance in beauty and the auto aftermarket is starting to level off, back-to-school shopping has yet to show up in a significant way, and challenging results for apparel, footwear and accessories demonstrate that consumers are holding off on updating their wardrobes. Consumers are shifting their dollars, not spending more, so marketers need to find ways to be the beneficiaries of these changes or risk being the victims. As fall weather approaches and looming distractions around summer activities and the election evolve, it will be important to watch how consumer spending behavior changes, because it will change.”
