Consumers demonstrate waning interest in spending amid reduced product innovation.
In March 2023, discretionary U.S. general merchandise retail sales revenue fell 7%, compared to March 2022, and unit sales fell 8%, which is double the average monthly declines in January and February. These steeper sales declines remained consistent during the last three weeks of March, spanning both units and dollars for the first time this year, according to Circana, formerly IRI and The NPD Group.
Investment in new product development was understandably put on hold due to uncertainties caused by the pandemic when most companies adjusted priorities to fulfill demand, addressed supply chain issues, and then focused on selling excess inventory. Before the pandemic, new general merchandise products represented more than 5% of the market. By the end of 2022, that number was less than 2%.
Changes in spending go deeper than the discretionary
Across discretionary general merchandise and consumer packaged goods (CPG), the trends in consumer spending and new product deficits in the marketplace have directional similarities that are intensified by elevated prices. Compounding these consumer distractions are news stories about inflation and bank insolvencies that continue to raise consumer concerns about the economy, which can adversely affect consumer sentiment and spending.
About Circana
Circana is the leading advisor on the complexity of consumer behavior. Through unparalleled technology, advanced analytics, cross-industry data and deep expertise, we provide clarity that helps almost 7,000 of the world’s leading brands and retailers take action and unlock business growth. We understand more about the complete consumer, the complete store, and the complete wallet so our clients can go beyond the data to apply insights, ignite innovation, meet consumer demand and outpace the competition.
