Amazon’s annual Prime Day event combined with other retailer promotions the same week revealed that consumers are continuing to spend, but are buying fewer items.
According to figures from The NPD Group, U.S. sales revenue from discretionary general merchandise for the week ending July 16, 2022, was 14% higher than last year’s non-promotional week. Unit sales were down 1%. Compared to the same week in pre-pandemic 2019, which also coincided with these promotional events, sales revenue rose 17% and unit sales declined 5%, according to NPD Group.
“Consumers are clearly getting energized by promotions as they continue to spend, but elevated prices and the lack of promotional depth are hindering already low demand,” said Marshal Cohen, chief retail industry advisor for NPD. “The typical back-to-school kickoff provided by Prime Days and other July retail promotions did not hit all industries equally, indicating this will be another flattened retail shopping period, similar to what we’ve seen with holiday peaks year-to-date.”
Industry-level performance shows consumers are just starting to spend on back-to-school items. Demand was higher during the promotional week in segments such as small appliances, beauty, and technology. However, big back-to-school product categories such as office supplies, apparel, and footwear have yet to get a similar lift. NPD research found that as of the third week of July, only 26% of consumers said they had started their back-to-school shopping. Of those who had not started, 41% said they were waiting for sales and 56% plan to start back-to-school shopping in August.
“The growing influence of promotional activity alongside the consumer’s ‘here and now’ shopping mindset will fragment sales results across industries and an extended back-to-school shopping season,” Cohen said. “Retailers and manufacturers need to monitor consumer activity across both short and long-term views to get a clear picture of how they are approaching spending.