Throughout the first quarter (Q1) of 2023, only a few general merchandise industries grew. But when we dig deeper to explore retail sales at the category level, more stories of growth emerge. Clearly, consumer lifestyle changes are leading to shifts, large and small, in the retail environment.
“Whether it’s social media’s growing influence, returning to the office, or just getting out to more activities and socializing, the social side of life is back,” said Marshal Cohen, chief retail industry advisor for Circana. “However, the enduring high prices of grocery items are now forcing consumers to prioritize their spending decisions and make trade-offs.
Seven of the 20 top-performing general merchandise categories in the first three months of the year were prestige beauty categories, led by face makeup and fragrance juices. Apparel accounted for another four of the top growth categories, including woven shirts and sportscoats.
Source: Circana, Retail Tracking Service (general merchandise), top growth based on absolute dollar change versus last year and positive unit growth versus last year.
“Consumers are still feeling financially crunched, but they are also resuming their busy social schedules, which is reflected in how they are spending,” said Don Unser, president of thought leadership for Circana. “Manufacturers and retailers should carefully consider their customers’ changing priorities and be prepared to respond to the opportunities that will come with the next phase of changes.”
Social progression’s influence goes beyond what consumers are buying. It affects when, where, and how they engage in many of their daily activities. Read on to learn how social progression is affecting retail momentum in this sampling of general merchandise and CPG categories.
Maria Rugolo, Industry Analyst
For brands and retailers, the winning sales strategy has evolved from category recovery to a focus on the momentum created by expanded lifestyle needs. Today’s transformed consumers will shop differently than they did during each of the past three years now that they are fully outside the walls of their pandemic cocoons. As consumers look to bring their wardrobes full circle, brands and retailers can grow by delivering on this evolution of need.
Key takeaways
Paul Gagnon, VP, Industry Advisor
During the pandemic, consumers invested in upgrading the home technology environment. Investment in home office work and school setups drove dramatic spending growth on computers, monitors, tablets peripherals, networking equipment, and more. Entertainment outside the home shifted inside, and sales exploded for TVs, sound bars, and headphones. Fast-forward to 2023, and consumers have shifted to spending more time (and money) outside the home. Sales revenue from consumer technology products has declined by 13% compared to a year ago. The only categories with strong growth are related to traveling more, especially products like item trackers to keep track of luggage and other valuables away from home.
Key takeaways
Scott Scanlon, EVP
Beverage alcohol is closely linked to the human need to belong. Social settings of bars and restaurants were replaced by patio barbeques and home bars during the pandemic. Consumers liked the at-home drinking experiences, and many of those behaviors continue. Total beverage alcohol weekly comps have been positive for 15 of 17 weeks in 2023, with anomalies driven by calendar adjustments for St. Patrick’s Day and Easter. U.S. consumers soon will fire up their grills for the biggest beer occasion of the year, the Fourth of July holiday. This year’s Independence Day weekend will deliver more than just fireworks — sales are poised for another surge as families and friends gather for celebrations.
Key takeaways
David Portalatin, SVP, Industry Advisor
People are resuming the out-of-home routines they had before the pandemic. This puts convenience at the forefront of their needs, especially when it comes to eating. Grabbing portable breakfast and lunch foods on the go, whether from the home or foodservice, is a growing behavior. Another is having a restaurant or foodservice outlet prepare the food that is eaten at home. Visits to restaurants and foodservice outlets increased by 2% in Q1 over a year ago. The search for convenience shows itself in at-home and away-from-home eating behaviors and food sales at retail.
Key takeaways
Sally Lyons Wyatt, EVP
Snacking throughout the day gained momentum when we were home during COVID, and it has not lost traction. In fact, snacking is still a lifestyle in the U.S. Nearly half (49%) of consumers consume three or more snacks per day, which has increased by 4 points in the past two years. Although younger generations fuel future sales potential, all generations snack three or more snacks throughout the day but at varying levels. However, in 2022, the economic situation hit core snack unit sales negatively compared to the year prior while dollar sales increased. Although several snack categories have proven to be inelastic, there was a change in the snacks consumers chose and the sizes purchased, which directly impacted unit sales.
Key takeaways
Larissa Jensen, Industry Advisor
As consumers settle into their new normalized behaviors, including gathering with each other, the beauty industry continues to benefit. Combined sales of beauty products sold in the mass market and prestige grew 13% in the first quarter. But while both markets are growing, the prestige beauty industry continues to be the standout, defying expectations with continued strong double-digit unit growth. Several behavioral shifts are at the core of prestige beauty’s success, including:
Key takeaways
