Consumers Pull Back on Non-Essential Spending
Washington, DC, March 3, 2023-"Consumers pulled back on purchases of apparel and electronics in recent months while continuing to spend on groceries and other necessities, according to some of the largest U.S. retailers,” reports the Wall Street Journal.
“Macy’s and Best Buy said they expect sales to fall this year, after declining in 2022, as stubbornly high levels of inflation and other economic issues weigh on shoppers. Macy’s Chief Executive Jeff Gennette said he expects consumers to be in worse shape in 2023 than they were last year.
Shoppers are looking to stretch their budgets, buying more lower-cost store brands and smaller sizes of some items such as paper products, said Rodney McMullen, chief executive of Kroger, the biggest U.S. supermarket operator.
“‘They are behaving as if they are already in a recession,’ Mr. McMullen said. At the same time, consumers are shopping more frequently than they have in recent months and, in some cases, still are splurging on products they want, such as premium beer, he said.
“The latest quarterly reports from retailers show a divergence in fortunes among sellers of discretionary products and staples or necessities. The Covid-19 pandemic gave a hefty lift to sellers of products from home goods to casual wear as homebound consumers shifted spending away from services and activities outside the home.
“As health restrictions eased, consumers returned to spending on travel, entertainment and services. Now rising prices, shifts in the labor market and a downturn in corners of the stock market have contributed to a malaise hitting shoppers across the country, retail analysts and executives have said.
“The spigot for spending hasn’t been completely turned off. Helped by an uptick in income, Americans’ spending showed unexpected strength in January, according to Commerce Department data. Retail spending rose 3% in the first month of 2023 from December on a seasonally adjusted basis, helped by spending on vehicles, furniture, clothing and dining out. One measure of shoppers’ moods, the University of Michigan survey of consumer sentiment, has shown improvement in recent months from multidecade lows this past summer as inflation has cooled.”