Consumers Save for Essentials

In February, spending on discretionary general merchandise continued to decline, with dollar sales down 5 percent and unit sales down 4 percent compared to the same time last year, according to Circana.

Meanwhile, both discretionary general merchandise and CPG sales remained flat, with units declining one percent compared to last February. For food and beverage, year-over-year sales revenue grew 1 percent, and unit sales were flat.

“Consumers are settling into their new spending pattern of buying what they need as they go. They are not overextending themselves financially, but they are not going without, either,” said Marshal Cohen, chief retail industry advisor for Circana, in a statement. “This prioritization emerged in discretionary spending over the last two years and is now becoming evident in some of the more essential retail food and beverage spending behavior.”

The report found that consumers have remained sensitive to price changes for the past few years. 

The data shows that each retail segment over the last year has elevated prices by 25 percent or more compared to 2019. While changes in general merchandise pricing are more volatile, with dramatic spending shifts compared to the evolutionary shifts in retail food and beverage, non-edible CPG, and quick-service restaurants, the influence from resulting changes in consumer behavior is just as impactful on sales volume, according to the report.

“Spending on retail food and beverage has stabilized and watching the exchange between food and general merchandise—or discretionary and nondiscretionary spending—is particularly critical,” said Cohen. “Distractions like the economy and politics are not currently instigating panic in the consumer, and changes to interest rates have yet to be realized. However, these are all realities with the potential of significantly impacting the way consumers think about their purchases, and how they prioritize and allocate their spending.”