Consumers feeling pinch as higher prices bite

Consumers are buying fewer products than they were a year ago as higher prices begin to bite, according to a new survey by The NPD Group.

More than eight in 10 US consumers are planning to mitigate their product spending in the next three to six months. Although merchandise retail sales revenue in May was up 2% year-on-year, and 22% above pre-pandemic levels, shoppers have begun to buy less than a year ago.

In the first three months of this year, consumers bought 6% fewer items at retail than in the first quarter of 2021. And despite a 10% increase in average product pricing, the declining demand meant the average spend per buyer was down by more than 2%.

In addition, people are shopping less, with a 5% drop in purchase frequency leading to a drop in impulse buys.

“There is a tug-of-war between the consumer’s desire to buy what they want and the need to make concessions based on higher prices,” said Marshal Cohen, Chief Retail Industry advisor for NPD.

“Marketers must be well versed in all the conditions, influencing their retail channel and their target consumer or they will risk missing growth opportunities,” Cohen said. “An appealing shopping environment, displays that make the product pop and persuasive promotions are necessary to get more items into the basket when consumers do shop.”