Lower sales prices on general merchandise still not enough to offset higher food costs hitting consumers

Port Washington, N.Y., February 15, 2023 – Discretionary U.S. general merchandise retail sales revenue in January 2023 was 3% lower than it was in January 2022, and unit sales were down 5%. Overall, the general merchandise average selling price exhibited some leveling in January, increasing just 2% compared to 2022. However, higher prices on consumer packaged goods (CPG), particularly food and beverage, still dragged down the consumer’s spending power, according to The NPD Group, which recently merged with Information Resources, Inc. (IRI).

“Rising prices have been a persistent component of the recent evolution of retail trends, and 2023 is starting off with more of the same,” said Marshal Cohen, chief retail industry advisor for NPD. “Higher food prices have impeded normal general merchandise behavior, from both a consumer and retailer perspective.”

Escalating prices across all of retail have led to a general decline in consumer purchasing, which has resulted in varying levels of promotional activity to help manage inventories. General merchandise, the area with the greatest demand challenges, enlisted the largest increase in promotional activity in 2022. Non-edible CPG promotion remained steady, compared to 2021. The food and beverage segment had a lower promotional level than it did in the prior year.

“Consumers have conditioned themselves to buy what they need when they need it, rather than when they see value. This behavioral shift has made promotions less impactful than in years past,” Cohen said. “Without new product to inspire purchasing, and a more complete understanding of consumer spending patterns, general merchandise sales will continue to be negatively affected by the consumer’s response to elevated prices.”