Food price increases drag on American purchasing power, while footwear sales resume steady growth

According to the latest research from the NPD Group, rising prices for essential items such as food and beverages are weighing on Americans’ spending power on other goods. In January, U.S. general merchandise retail revenue fell 3% year-on-year, and unit sales fell 5%. At the same time, footwear sales showed a steady growth momentum.

As food prices continue to rise, Americans cut back on other daily expenses

NPD data showed that overall, average sales price growth for general merchandise was flat in January, up just 2% compared to 2022. However, rising prices for consumer packaged goods (CPGs), especially food and beverages, still caused a decline in purchasing power for American consumers.

From both the consumer and retailer perspective, higher food prices have discouraged consumption of other general merchandise, which has led to an increase in promotional activity for other items. In 2022, general merchandise saw the largest increase in promotional activity, while non-food CPG promotions remained stable compared to 2021, and promotion levels decreased in the food and beverage space.

Analysts pointed out that American consumers are developing the habit of buying on demand, a trend that has led to a smaller impact of promotions than in the past few years. Therefore, to avoid a decline in consumer demand for general goods, retailers cannot simply promote consumption through promotions and profit sharing.

A wiser approach would be to launch new products, fully understand consumers' consumption patterns and psychology, and better meet consumer needs.

Footwear sales growth is steady, and shoes suitable for multiple occasions are more popular

According to research by NPD Group, after experiencing sales fluctuations since the pandemic, U.S. footwear sales are expected to stabilize over the next three years. At the same time, the lines between fashion, casual and performance footwear are becoming more blurred.

The latest "Future of Footwear" forecast report indicates that footwear sales and price trends will flatten, with the industry's sales revenue growing steadily at a rate of 1% by 2025, while unit sales will begin to improve in 2024 as the pressure of average price increases is relieved.

Consumers pay more attention to the versatility of products when purchasing footwear products, and shoes suitable for daily leisure will become the preferred products of most consumers in the first half of 2023. Sports and leisure shoes will continue to be regarded as necessities in footwear, while formal shoes, outdoor shoes and slippers are more likely to be regarded as non-necessities.

Sports and leisure shoes generated the highest sales in 2022, but fashion shoes grew the fastest. However, by 2023, the demand for the latter will slow down, and shoes with comprehensive sports and fashion effects will become mainstream.

Analysts pointed out that in a market that is expected to remain stable in the short term, what footwear brands need to do is to grab market share. Brands need to keep pace with consumer demand and make a good multi-channel layout.

Editor✎ Ashley/

Disclaimer: This article is copyrighted and may not be reproduced without permission.