Consumers remain wary of spending given the uncertain economy, according to Circana, which reported U.S. discretionary general merchandise retail sales revenue dropped 4% in February 2023 year over year while unit sales slipped 5%.
Weekly declines have remained relatively consistent through the first two months of 2023, noted Circana, the newly named company formed by the merger of IRI and NPD Group. The week leading up to Valentine’s Day suffered the sharpest drop in sales so far, according to the market analytics company. Consumers spent 9% more on food and beverage products than they did in February 2022, but the gap between sales revenue and unit sales performance is narrowing, particularly among general merchandise and non-edible consumer packaged goods, Circana reported.
Marshal Cohen, chief retail industry advisor for Circana, said retail established some consistency last year, but volatility continues to affect the marketplace as rising food and beverage prices continue to strain discretionary spending power. Demand declines are becoming increasingly similar across all retail, he added, so marketers should prepare for more changes to consumer spending.
“On the surface, consumer behavior has changed very little since last year, solidifying some of the overarching retail spending trends that emerged in 2022 as the new benchmark,” Cohen said. “But the consumer has become more loyal to value and meeting their fundamental needs, making more specific spending changes inevitable.”