Circana: Retail sales hold steady, but price remains a pressure point

Prioritized discretionary shopping patterns may signal broader retail shifts as consumer distractions looms

That’s according to a new report from Circana, which found that U.S. retail sales revenue, including both discretionary general merchandise and consumer packaged goods, remained flat in February, and units declined 1% compared to the same month last year.

Discretionary general merchandise spending declines continued at the newly established levels, with 5% dollar and 4% unit sales declines compared to last February. CPG performance also held steady from last month. 

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.

Consumers are settling into their new spending pattern of buying what they need as they go, advised Marshal Cohen, chief retail industry advisor for Circana.

“They are not overextending themselves financially, but they are not going without, either,” he said. “This prioritization emerged in discretionary spending over the last two years and is now becoming evident in some of the more essential retail food and beverage spending behavior.” 

Spending on retail food and beverage has stabilized, and watching the exchange between food and general merchandise — or discretionary and non-discretionary spending — is particularly critical, added Cohen. 

“Distractions like the economy and politics are not currently instigating panic in the consumer, and changes to interest rates have yet to be realized,” he said. However, these are all realities with the potential of significantly impacting the way consumers think about their purchases, and how they prioritize and allocate their spending.”  

The consumer has been significantly affected by price changes across retail for the past few years. Each retail segment has at some point over the last year elevated 25% or more in price compared to 2019. 

While changes in general merchandise pricing are more volatile, with dramatic spending shifts compared to the evolutionary shifts in retail food and beverage, non-edible CPG, and quick-service restaurants, the influence from resulting changes in consumer behavior is just as impactful on sales volume.

The areas of the greatest growth during the past year highlight some specific consumer priorities, according to Circana: 

•Consumers pampered themselves with skincare, but they also maintained their cars.

•They worked and played, spending on sports equipment and tailored apparel.

•Increased spending on things like pet supplements, paper towels, and toilet paper demonstrates what the consumer deemed essential.

•Consumers responded to both social and promotional influences — the former propelling the portable beverageware trend, and the latter conveying exciting product offerings within the challenged technology and toy industries.