More than 8 in 10 U.S consumers are planning to make changes to mitigate their product spending in the next three to six months, according to The NPD Group.
While general merchandise retail sales revenue is up year over year by 2% through mid-May and 22% above pre-pandemic levels in 2019, consumers have already begun to make fewer purchases than a year ago, according to NPD.
“There is a tug-of-war between the consumer’s desire to buy what they want and the need to make concessions based on the higher prices hitting their wallets,” said Marshal Cohen, chief retail industry advisor for NPD. “And consumers aren’t just buying less stuff, they are shopping less, which means a loss of the impulse-shopping moments that are critical to retail growth.”
In the first three months of 2022, consumers bought 6% fewer items at retail than they did in the first quarter of 2021. Despite a 10% increase in the average selling price of the products purchased, this decline in demand sent the average amount spent per buyer down more than 2% during the same period. The 5% drop in purchase frequency of U.S. buyers is further contributing to the slowing of retail sales, NPD noted.
Consumers in a recent NPD survey indicated plans to look for more promotions, seek generally less expensive items or cut back on purchases overall in the next three to six months. Nearly 70% of consumers indicated labor shortages have caused reactive changes to their purchases in the past six months, including visiting different retailers and eliminating planned purchases.
“Marketers must be well versed in all the conditions influencing their retail channel, and their target consumer or they will risk missing growth opportunities,” Cohen said. “An appealing shopping environment, displays that make the product pop and persuasive promotions are necessary to get more items into the basket when consumers do shop.
