Retail spending is up year over year, but that doesn’t mean consumers are buying without care. Many shoppers are more sensitive to price, which may mean trading down in quality or brand, or searching for discounts.
Data from the U.S. Census Bureau released last week estimates that June retail sales were up 2.3% over last June. (Sales for the first six months of 2024 were up 2.8% over the same time period in 2023.) The report is even more positive after taking out autos and gasoline—a 3.6% year over year increase, and 0.8% increase over May 2024.
“The data is more positive than (consumer) sentiment,” Ted Rossman, senior industry analyst at Bankrate, told Modern Retail, adding that most consumers are still feeling squeezed by the fact that prices are up roughly 20% over the last two and a half years.
But the rate of inflation is indeed slowing and pricing discounts may be encouraging consumers to buy… so consumers are cautiously still spending.
Discounts are Key
A recent survey from market research and data analytics firm Circana found that discount offers led 40% of consumers to make a purchase rather than delay spending. More than eight in 10 said they would buy a product immediately if the price appeared to be a good deal compared to typical pricing.
Overall, price appears to be decreasing across the home and housewares category, Joe Derochowski, Circana vice president and home industry advisor, told HomePage News late last month. Looking at recent weeks, he said prices in general merchandise were down 2%, while prices in the housewares were down 1%.
But it’s hard to generalize across home and housewares categories, he said. In kitchen electrics and housewares, products at entry level pricing are increasing in share, while in home environment, products in the middle price range are doing best. When it comes to personal care, products at higher price points are the ones gaining share.
Overall, Derochowski says a consumer’s decision to buy a home or housewares product (and at what price point) is coming from a combination of factors right now, including the mix of products/price points available in that category, how important the product is to the consumer, and if there are innovations at play that might help to inspire purchase.
Summer Promotions
Though Amazon started the trend in 2015 with its Prime Day event, Walmart, Target, Wayfair and Kohl’s now have summer deal days as well. As a result, consumers have come to anticipate these major summer sales. Algolia found in a recent survey that 49% of U.S. adults were waiting for summer sales to shop for something they know they want to buy.
According to an early report from Numerator, last week’s Amazon Prime Day event generated 94,000 orders with an average household spend of $152.33. The top 10 product categories sold on Prime Day were Apparel (27%), Home Goods (26%), Household Essentials (25%), Beauty or Cosmetics (22%), Health and Wellness (21%), Consumer Goods (19%), Pet Products (14%), Groceries (13%), Toys/Video Games (12%) and Small Appliances (11%).
“This year’s Prime Day focused on small indulgences and everyday items,” said Numerator analyst Amanda Schoenbauer. “Shoppers purchased fewer big-ticket items than we’ve seen in past years, and fewer participants placed multiple orders throughout the sale, indicating a shift to more conscious shopping and a preference for saving over splurging.”
Learn more about the impact of pricing on the 2024 housewares consumer in this episode of “RapidFire with Circana” on HomePage News.