Overall, consumer spending levels at retail are holding relatively steady to recent trends, but what consumers are spending on is changing, according to market research and analytics company Circana.
U.S. retail sales revenue and unit demand for four weeks ending April 27, 2024, including discretionary general merchandise and consumer packaged goods, declined 1% and 2%, respectively, compared to the same month last year, Circana reported.
“Retail sales have settled into a pattern of consistency in overall consumer spending where year-over-year comparisons are challenged to realize growth or parity, in some cases, even at the traditional retail selling peaks,” said Marshal Cohen, chief retail industry advisor for Circana. “As consumers stabilize their spending, the competition for their dollars heats up. Marketers need to leap at the brief windows of opportunity created by seasonal and socially inspired consumer reprioritization that lie below the surface.”
In the week ending May 4, 2024, discretionary general merchandise retail sales revenue fell 4% and unit demand fell 1% versus the same week last year, Circana reported. Price elevation has created growing competition between discretionary and non-discretionary categories as consumers have needed to make financial trade-offs. Leisure and performance footwear and small home comfort appliances drove 5% sales revenue growth in footwear and small appliances during the first week of May. With this renewed consumer focus on wardrobe and lifestyle comes new opportunities but also increased competition for discretionary categories that have enjoyed enduring growth, according to Circana. As a result, prestige beauty is navigating recent sales declines that have occurred rarely during the past few years.
“The current trend of consumer malaise related to purchases is one that manufacturers and retailers need to set their sights on resetting in order to return to growth,” Cohen said. “In the meantime, new opportunities to engage the consumer are making appearances, but retail must venture beyond traditional thinking to meet the consumer where they are in those moments, re-engaging them before the growing field of competition does.”
