Changes in consumer behavior that were prevalent though 2023 remain a factor as 2024 gets underway.
CHICAGO, February 14, 2024 — In January 2024, U.S. retail sales, including both discretionary general merchandise and consumer packaged goods (CPG), were flat in both units and revenue compared to the same month last year. Discretionary general merchandise spending declines continued at the newly established levels during the four weeks ending January 27, 2024, with 5% dollar and unit sales declines compared to last January. CPG performance held relatively steady. Food and beverage year-over-year sales revenue grew 1%, and unit sales were flat. Non-edible CPG sales improved slightly, with 2% revenue growth and a 1% unit sales decline, according to Circana, the leading advisor on the complexity of consumer behavior.
“The absence of growth in nonessential purchasing remains with the continued lack of innovation, impulse purchases and seasonal spending,” said Marshal Cohen, chief retail industry advisor for Circana. “Shifts in consumer behavior that the pandemic initiated were then reinforced by economic concerns, and the ‘buy now, wear now, use now’ approach to spending has evolved from a short-term adjustment to a new way of life.”
The missing retail elements proved too big for even the holiday shopping season to overcome. Overall, 2023 closed out with 3% retail revenue growth and a 2% unit sales decline. Prestige beauty was the only general merchandise industry to post growth across dollars and units in 2023. Most CPG industries experienced year-over-year dollar gains, but overall demand fell short.
Despite ongoing price declines in retail food and beverage, discretionary purchase behavior is unwavering at the start of February. During the week ending February 3, 2024, U.S. dollar sales of discretionary general merchandise were 5% lower than in the same week in 2023, and unit sales declined 4%. Only office supplies, automotive aftermarket, housewares and beauty had positive sales revenue results in the week straddling January and February.
“The purchase process has changed, and the change spans all industries and channels,” added Cohen. “These widespread changes are rooted in need and practicality, rather than in desire and indulgence. Manufacturers and retailers need to adjust to this new behavior in order to create another shift in the consumer’s spending priorities.”
