More than 8 in 10 U.S. consumers are planning to alter their spending habits in the coming months, according to a new survey from The NPD Group.
While general merchandise retail sales revenue is down only 1% through mid-May compared to the same period in 2021 and 19% above pre-pandemic levels in 2019, consumers have already begun to make fewer purchases than a year ago. These shifts in shopping behavior will have broader retail consequences, NPD experts said.
“There is a tug-of-war between the consumer’s desire to buy what they want and the need to make concessions based on the higher prices hitting their wallets,” said Marshal Cohen, chief retail industry advisor for NPD. “And consumers aren’t just buying less stuff, they are shopping less, which means a loss of the impulse-shopping moments that are critical to retail growth.”
In the first three months of 2022, consumers bought 6% fewer items at retail than they did in the first quarter of 2021. Despite a 10% increase in the average selling price of the products purchased, this decline in demand sent the average amount spent per buyer down more than 2% during the same period. The 5% drop in purchase frequency of U.S. buyers is further contributing to the slowing of retail sales.
In a recent NPD survey, consumers indicated plans to look for more promotions, seek generally less expensive items, or even cut back on purchases overall in the next three to six months. In addition to making these changes in spending, nearly 70% of consumers indicated labor shortages have caused reactive changes to their purchases in the past six months, whether going to a different retailer to eliminating the planned purchase.
“Marketers must be well versed in all the conditions influencing their retail channel, and their target consumer or they will risk missing growth opportunities,” Cohen said. “An appealing shopping environment, displays that make the product pop, and persuasive promotions are necessary to get more items into the basket when consumers shop.