General merchandise retail sales revenue declined during the three weeks ending Nov. 5, 2022. In addition, year-over-year sales revenue in October dropped 5% below a year ago, followed by a 14% decline in the first week of November.
Higher food prices are the reason, according to the NPD Group, a global technology, analytics and data provider firm.
“The growing weekly grocery costs and monthly credit card bills have begun to chip away at discretionary purchases,” said Marshal Cohen, chief retail industry advisor for NPD. “Consumers can only absorb climbing expenses for so long before they begin to reassess their spending capacity.”
For much of 2022, elevated average prices kept general merchandise sales revenue hovering at or above 2021 level. Until recently sales have maintained healthy gains compared to 2020 results.
At the same time, spending on food and beverage and other consumer packaged goods (CPG) continue to exceed results of any of the past three years. NPD said rising food and beverage prices and the shift toward consumer spending on food in general is now impacting spending in other areas.
“Rising interest rates and other aspects of the economy are affecting consumer confidence, and the lack of new product is impairing their need and desire to spend,” Cohen said.
“Over the holidays and into the new year, consumers will be looking for exclusive product offerings, uniquely compelling benefits, and promotions that break through the noise and create a sense of urgency to make the purchase.”
In addition to the growing competition for the consumer’s wallet, NPD said many consumer needs are still being fulfilled by purchases made in the past two years, resulting in lower demand levels.