Inflation remains stubbornly high and that's affecting consumers’ spending habits over the last year. A new study conducted by Gravy Analytics is highlighting the anticipated spending trends over the course of the next 12 months.
In comparing consumer shopping trends from the fourth quarter of 2021 with the results from the fourth quarter of 2022, it’s clear that consumers are prioritizing essential purchases as of late. This also means that expenses that aren’t necessities are likely to fall by the wayside.
“Insights from our report show that consumers are making careful decisions about their spending and are looking for value much more now than they were a year ago,” said Jeff White, founder and CEO of Gravy Analytics. “As widespread layoffs and economic uncertainty rage on, expect consumers to look for ways to save money on clothing, housewares, and other living essentials so long as job security and inflation remain concerns.”
Eating in versus eating out
One of the trends that emerged from the survey was where consumers are spending their money – especially as it relates to food. Spending on restaurants decreased, while spending at grocery stores and discount stores increased.
Entertainment-related spending dropped nearly 30% between the end of 2021 and the end of 2022, and this included nearly all kinds of restaurants – except for fast food.
However, spending at discount grocery stores went up. Purchases at Meijer stores went up 50%, while Wegman's purchases went up 48%. More expensive grocery stores, like Trader Joe’s and Whole Foods, saw a decrease in foot traffic.
Focusing on the essentials
Overall, these trends held up in nearly every category. Consumers are spending their money on what’s important and necessary, while purchases related to entertainment aren’t a priority.
Home-building stores had the greatest increase in foot traffic in the fourth quarter of 2022 (41% increase), followed by wholesale stores, grocery stores, pet stores, and discount stores. On the other hand, gift stores, department stores, and sporting goods stores all had fewer patrons during this time.
Similarly, travel and recreation spending decreased. Train stations had the biggest foot-traffic deficit (23%), followed by airports and bus stations, while gyms and beauty services saw a 25% and 22% decline, respectively.
Experts believe that these trends are likely to hold throughout 2023. Prices aren’t expected to change much, leaving little room for spending on things outside of the necessities.
“Based on our findings, we predict that discretionary purchasing activity will not recover anytime soon given the current economic climate,” said White. “This means places like gyms, restaurants, sports venues, and luxury retail locations will continue to see decreased foot traffic this year as consumers utilize low-cost or free alternatives like cooking at home, hiking through a public park, or taking advantage of discount stores and one-stop shopping.”