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Over the past two years, US consumers were much pickier when it came to purchasing discretionary goods. Now that “prioritization” is “becoming evident in some of the more essential retail food and beverage spending behavior,” Marshal Cohen, chief retail industry advisor for Circana, said in a statement.
The consumer research group’s latest data shows that in February, food and beverage revenue grew 1% YoY, though unit sales were flat, and nonedible consumer packaged goods revenue grew 2%, though unit sales fell 1%. This is still better than the 5% revenue decline and 4% drop in unit sales of discretionary general merchandise, but the US consumer appears to be more cautious across these categories.
“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,” Cohen said.
The backdrop for this shift in shopping behavior is a US consumer with slightly higher levels of debt and delinquency, according to the latest data from the Federal Reserve of New York.
The bank’s Q4 2023 report, released last month, found that aggregate household debt increased 1.2% from the previous quarter, while delinquency rates ticked up 0.1% to 3.1%—though that’s still 1.6% lower than the rate in Q4 2019.
Personal spending is holding up, however: It rose 0.2%YoY in January from the month before. The increase was due to a $121 billion increase in spending on services, although spending on goods declined by $77 billion.