U.S. Discretionary Retail Spending Decreased in 2022

Units and sales revenue were both down for most of the year, according to The NPD Group.
C-store shoppers

PORT WASHINGTON, N.Y. — U.S. consumers cut back in their discretionary spending in 2022, according to new research by The NPD Group.

Total unit sales of discretionary general merchandise were down 7 percent last year compared to 2021, while sales revenue declined 2 percent. Although the year concluded with a similarly lackluster holiday shopping season, retail sales revenue in December reached parity with December 2021. This could be seen as a strong finish when taking into account the demand declines that occurred throughout most of the year, according to the research firm.

"While holiday season sales usually increase compared to the prior year, the holidays could have and should have been worse this year," said Marshal Cohen, chief retail industry advisor for NPD. "Double-digit increases in food prices, weather disruptions, early promotions, little depth in discounts and the absence of innovative products made for a long list of shopping hurdles contributing to the muted holiday and annual retail results."

Based on U.S. retailer point-of-sale information, 2022 kicked off with eight weeks of healthy performance before taking a downward turn in mid-March. During the rest of the year, just 11 weeks delivered revenue gains over 2021, according to The NPD Group. The two highest-selling weeks occurred during mid-July retail promotions and over the Christmas holiday.

Higher average prices for general merchandise helped to create better revenue results. However, those same high prices also cut into already dwindling consumer demand.

Unit sales only grew during six weeks of the year.

"Consumers have increasingly limited discretionary spending power, and limited needs for general merchandise following the pandemic purchasing surge," Cohen said. "In order to recover from the challenges of the past year, retailers and manufacturers will need to find new ways to elevate the value of their product in the eyes of the consumer."

Based in Port Washington, The NPD Group offers data, industry expertise and prescriptive analytics.