According to the National Retail Federation (NRF), retail sales grew modestly in April amid overall weakened consumer spending. NRF Vice President of Industry and Consumer Insights Katherine Cullen joins Wealth! to discuss the state of the consumer as inflation remains relatively high.
Cullen notes that consumer spending is normalizing as shoppers across income spectrums face “shifts in their spending patterns.” “They’re really prioritizing what’s important to them. And as we expected, we’re seeing a moderated level of spending on goods, though still above what we saw last year,” she explains, adding that the retail industry is on track to achieve between 2.5% and 3.5% growth year over year.
As inflation continues to put pressure on wallets, consumers are prioritizing value. Cullen says that more consumers are choosing to swap out some private-label brands for discounted versions and pull back on dining out.
She believes consumer spending will continue as wages keep up with inflation. Cullen adds that the sporting, home, and gardening sectors are strengthening ahead of the summer season.
“This is a consumer that still feels comfortable, still feels somewhat confident in their own job security, and feels a level of comfortability continuing to spend,” Cullen tells Brad Smith.
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This post was written by Melanie Riehl
Video Transcript
A new read out on the pulse of the Consumer National Retail Federation reporting.
Retail sales grew modestly in April with the total sales including automobiles and gasoline up nearly 3/10 of a percent from March.
For more on this.
I’m joined by Catherine Cullen who is the National Retail Federation, Vice President of Industry and Consumer Insights.
Katherine.
Great to have you here with us on the show.
First and foremost, I, I read through this report, I looked through some of the line items as well here.
Just want to get the broad read right now on what we should be making on the pulse of the consumer.
Well, thanks for having me on Brad.
And what we’re really seeing is is something we were expecting this whole time, which is a normalization of consumer spending.
We’re seeing shoppers across income spectrums facing various uh challenges shifts in their spending patterns.
They’re really prioritizing what’s important to them.
And as we expected, we’re seeing a model rated level of spending on goods.
So still above what we’ve seen what we saw last year and we’re still on track to achieve between 2.5 and 3.5% growth year over year for the entire year.
All right.
So as we get towards normalization, what does that mean for the category level?
What performs best during normalization?
And what underperforms?
Well, we know that today’s shopper is facing high inflation in some aspects of their life like services.
So they’re rebalancing their budget uh on some goods, they are looking really for value for some consumers.
That means maybe shopping a little bit more discount, maybe um trading down to a private label brand, maybe pulling back on dining out, which is a category that we saw performed a little less strongly um this past month in order to spend on some of the other areas of their lives.
But we are seeing that consumers are expecting their wages will keep up with inflation.
Um They are expecting to continue, continue spending and we’re even seeing that with some strength and category like sporting goods um heading into some of the warmer months of the year as well as home and gardening sectors.
Um as again, we’re heading into kind of spring summer time with people sprucing up their lawns and spending more time outdoors.
Yeah, big green thumb energy there for sure.
You know, Katherine, as I think about how the way that the consumer has been defined has shifted over this past 18 months from resilient to healthy and to now it seems like the the consumer as we’re defining more broadly scale because it is tiered between high income, middle and then low income.
It seems like on aggregate, we’re, we’re saying that the consumer is normalizing or where, where is the true definition of that?
What is the one word I like to use savvy?
This is a shopper who is used to balancing their budget and they’re reacting to forces that they’re seeing in other parts of their lives.
If they see higher prices in one area like gas or travel or health, they’re being smart with their money saying, hey, I’m going to rebalance my budget.
Look for sales, looks for promotions, make sure I can really afford the items that my family needs.
Uh But we are really seeing consumer invest in what’s important to them, obviously getting through on essentials.
But also um we’re seeing strong spending around holidays and special events and we are continuing to see spending around experiences.
So this is a consumer that still feels comfortable, still feels somewhat confident in their own job security.
Um and feels a level of, of comfortable continuing to spend.
Certainly things can change.
Uh We know obviously not to get too used to normal these days.
Um But we are seeing this consumer be very savvy, very smart with their money.
All right, I like to be called savvy.
So I’ll take that Katherine.
Thanks so much Katherine Collin, who is the NRF Vice president and Industry of consumer insights.
Great to speak with you.
Here today.
Great to be with you as well.
Take care.