According to market research and analytics firm Circana, retail revenue in the United States ticked up 1% during May year over year. Still, unit volume fell 1% as consumers evaluated what they spent against economic and tariff concerns.
Prioritization variability is especially evident in a comparison between adult-only households and households with children. Although consumers who have children are incurring the same elevated prices on food, they are continuing to spend more on discretionary items, as kids are an enduring priority. Households with children represent less overall discretionary spending than adult-only households, Circana noted, but they are still delivering growth, providing retailers with opportunity. Still, as cost pressures mount, spending growth among households with kids may diminish.
For the four weeks ending May 31, retail food and beverage sales revenue gained 3% year over year, and unit volume was flat, according to Circana. Non-edible CPG dollars grew 1%, but unit volume declined 2%. Discretionary general merchandise retail dollar sales fell 3% while unit volume decreased 4% versus the same period a year ago. In May’s final week, apparel led the decrease in general merchandise spending while prestige beauty sales rebounded into growth mode and reclaimed the general merchandise top spot. An earlier increase in consumer technology spending, fueled by concerns over potential tariff impacts, dropped back as duties became a reality.
“Consumers are prioritizing their spending to a degree not seen since the pandemic, and consumer sensitivity to price and priority will only elevate as market pressures evolve,” said Marshal Cohen, chief retail industry advisor for Circana, in announcing the May figures. “Today’s prioritization behavior is not consistent across all industries, or even consumer segments, and is likely to change in the weeks and months ahead as we navigate through the early stages of price increases and tariff-impacted product appears in stores. Consumer behavior is becoming predictive, particularly as it relates to discretionary purchases. Minimal changes to food spending behavior put more pressure on general merchandise to absorb the changes made by consumers, making it critical for marketers to not only observe and react to a shift in one market segment but also view those shifts as a preview of what will come in other segments.”
