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Consumers Rethink Retail Spending Priorities

Circana: Though discretionary general merchandise spending has fallen year over year, CPG spending remains elevated.
Group of people holding shopping bags

CHICAGO — Though back-to-school sales usually result in a busy retail season, discretionary spending and unit sales have fallen compared to the same time last year, according to Circana.

[Read more: Foodservice Customers Increasingly Dine Out on Deals]

Discretionary general merchandise spending declines continued with a 4 percent decline in dollar sales and 7 percent drop in unit sales compared to last July. Consumer packaged goods (CPG) spending remained elevated with 4 percent growth in food and beverage, and a 3 percent increase in nonedible revenue. However, the impact of elevated prices on demand are evident even in CPG, with unit sales falling 1 percent and 3 percent, respectively, across edible and nonedible segments, Circana found.

That said, not all retail news over the summer was bad. In July 2023, U.S. retail sales revenue, including both discretionary general merchandise and CPG increased 2 percent compared to the same month last year.

"Retailers and manufacturers need to find the trigger points that will motivate the consumer to start to spend, despite reprioritization and the various economic challenges they are facing," said Marshal Cohen, chief retail industry advisor for Circana.

Overall, discretionary general merchandise spending declines continued into the first week of August. The shifts in consumer spending have resulted in a delayed start to the back-to-school shopping season. This first week of August is traditionally a peak back-to-school shopping week, but instead sales revenue of back-to-school general merchandise took a dip, falling below last year and pre-pandemic 2019 levels.

"Consumers are holding off on making some of their purchases, which will cause more of the back-to-school retail sales to occur after the traditional shopping period," said Cohen. "Back-to-school shopping isn't absent, but the season will be tardy, with more sales hitting in late August, September and even October."

[Read more: SNAP Households Cut Back on Food & Discretionary Spending]

Chicago-based Circana serves as an advisor on the complexity of consumer behavior. Through advanced analytics, cross-industry data and subject matter expertise, Circana provides insights and research that helps clients unlock business growth.

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