Consumer Edge: Department store, luxury spend weakened in second half of 2023

New data reveals retail category winners and losers across the globe in the second half of 2023.

Online retailers, pet products/services, discount/club stores, ground transportation, health products/services grocery and limited-service restaurants were the only industries that grew sales across all geographies, according to Consumer Edge.

Online spending in particular stood out on the upside, as growth accelerated into latter part of 2023 following a solid performance in the beginning of the year,.

“In reviewing our global spending data, the CE Insight Center uncovers winners and losers among key industries during the second half of 2023,” said Michael Gunther, VP and head of insights at Consumer Edge. “These takeaways highlight shifts in consumer behavior and can help companies develop specific themes and targets for 2024.”

Here are some of Consumer Edge’s findings.

•Consumer spending on luxury items declined across all three geographies. As inflation continues to squeeze real incomes and aspirational shoppers pull back on particularly pricey items, luxury became the worst performer out of all the industries in the U.S. and UK and the second worst in the EU (second only to travel).  This decreased appetite for direct-to-consumer luxury spilled over into the full-price department store space across the globe.

•Apparel, accessories and footwear posted mixed results, as strength in fast fashion offset softness in the other categories. Consumer spending at fast fashion brands grew in the U.S., UK and EU, as the challenging macroeconomic environment and strained budgets generated increased interest in more affordable items. Consumer spend growth was negative globally for the higher-ticket women’s apparel/accessories sub-industry.

•Restaurant spending growth decelerated from the first half of the year to the second, although both full-service and limited-service ended 2023 on a positive note. The average check increased compared to 2022 as food and labor inflation persists.  Consumers visited limited-service restaurants more in 2023 than in 2022, but trips declined for their full-service peers, reflecting an environment of strained consumer budgets and trade-down behavior.

•Home and garden sales in the U.S. declined in the second half of 2023 as high mortgage rates and limited supply continued to pressure housing market activity. Sales increased modestly in the UK and EU.

“Brands can identify impactful shifts in consumer behavior and new emerging trends by reviewing transaction data,” Gunther said. “By leveraging this data, companies can make more informed data-backed business decisions in the year ahead.”