Consumer Spending Trends and Their Impact on Retail Growth in 2024

Consumer Sentiment and Confidence Levels

Consumer sentiment and confidence levels are currently low, with notable dips observed despite a strong job market. Lower-income consumers are experiencing stress, leading to a deal-seeking behavior, particularly in markets like China. Retail growth may be challenged as consumers prioritize value amidst these sentiments.

"And I would point out consumer sentiment in most of our major markets remains low." --- (MCD, earning call, 2024/Q2)

"In fact, consumer confidence took a meaningful dip in April despite a strong job market and normalizing inflation." --- (TGT, earning call, 2025/Q1)

"And we talked about the fact that the lower income consumer is feeling a little bit of stress." --- (DIS, earning call, 2024/Q1)

"So we're seeing that benefit from both sides of the consumer that great value in both areas are doing very well." --- (COST, earning call, 2024/Q1)

"Consumer sentiment in China is quite weak, and you're seeing both in our industry and across a broad range of consumer industries, the consumer being very, very much deal seeking. In fact, we're seeing a lot of" --- (MCD, earning call, 2024/Q2)

Current and Future Consumer Spending Trends

Current consumer spending trends are influenced by macroeconomic pressures like high inflation and shifts towards travel and entertainment, leading to declines in retail sales for some companies. However, others, like Amazon, report revenue growth, indicating varied consumer behavior. Retailers are adapting by focusing on value and smaller projects.

"In the first quarter of fiscal 2025, we generated $8.8 billion in revenue and our comparable sales declined 6.1% as we continued to operate in a consumer electronics industry that is challenged by various macroeconomic pressures, including high inflation, increased spending outside the home in areas such as travel and entertainment and lower levels of product innovation." --- (BBY, sec filing, 2025/Q1)

"While comparable sales for the Company are not currently on the trajectory for the low end of the range, a negative 4% comp implies incremental pressure on consumer demand beyond what we are seeing today. We expect to open approximately 12 new stores." --- (HD, earning call, 2024/Q2)

"This gives me great confidence that we can bring shoppers the right assortment at the right values throughout the remainder of the year and for many years to come. Next, the flexibility of our buying and planning and allocation teams allows us to go after the hottest categories and trends that drive customer excitement with the flexibility of our supply chain, I am confident that we can merchandise each of our stores with a curated assortment of good, better and best brands that will excite and inspire our shoppers. Lastly, we feel great about our marketing plans." --- (TJX, earning call, 2025/Q2)

"So given these trends, as we look at home improvement spend in the near term, we think it's going to be focused more on smaller projects and looking for value, and we are working to position ourselves to be in that space as effectively as we can." --- (LOW, conference, 2024/06/26)

"I'll speak more to our profitability trends in a moment. In the North America segment, first quarter revenue was $86.3 billion, an increase of 12% year-over-year." --- (AMZN, earning call, 2024/Q1)

Impact of Inflation on Spending Behavior

Inflation significantly impacts consumer spending behavior, constraining budgets and savings for families. Companies like Coca-Cola and Procter & Gamble highlight the challenges of maintaining sales amid rising costs, while Walmart and Costco emphasize the need to manage inflationary pressures effectively.

"And not surprisingly, when you look at the cumulative impact that inflation has had on their baskets of goods and services and their ability to continue to afford them." --- (KO, conference, 2024/09/05)

"More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary pressures and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe." --- (PG, sec filing, 2024/Q3)

"And the cycles, when this began, we talked to a bunch of my colleagues who have managed businesses in Latin America and other parts of the world where inflation is more of a normal event And decided that we would actively engage and manage all three phases, which the first phase on the rise up, a bit easier to hit your top line, but cost pressures are all over." --- (WMT, conference, 2024/06/11)

"But I think we are our own probably toughest competitor and that we look at what's happened in the marketplace over the last few years and when we were seeing high inflation and the risk and concern around recession." --- (COST, earning call, 2024/Q1)

"And beyond the psychological toll of the current environment, the sustained level of elevated prices has had a meaningful impact on budgets and savings for many families." --- (TGT, earning call, 2025/Q1)

Shifts in Consumer Preferences and Behaviors

Shifts in consumer preferences are evident as brick-and-mortar traffic declines, particularly in Greater China, and purchasing behaviors are influenced by economic uncertainties like inflation and high interest rates. Companies like Nike and Lululemon are adapting by reinvesting in consumer engagement and aggressive marketing strategies to meet these changing demands.

"Third, we experience meaningful shifts in consumer traffic in key markets, particularly in Greater China, where brick-and-mortar traffic declined as much as double digits versus the prior year." --- (NKE, earning call, 2024/Q4)

"Consumer purchasing behaviors and their propensity to spend in our sector have been impacted by uncertain economic conditions including inflation, higher interest rates, and other factors, which has adversely impacted consumer demand for our products." --- (LULU, sec filing, 2024/Q2)

"These changes will result in a net reduction of our global workforce. We expect a majority of the future annual wage savings from these actions will be reinvested in consumer facing activities to drive greater impact for our consumers, sports dimensions and the total marketplace." --- (NKE, sec filing, 2024/Q3)

"Consumer purchasing behaviors and their propensity to spend in our sector have been impacted by uncertain economic conditions including inflation, higher interest rates, and other factors." --- (LULU, sec filing, 2024/Q1)

"And while this is challenging, and it's going to be challenging over the next couple of quarters, our history has demonstrated that when we take action and we do it aggressively, and we get behind the things that are new, and we build marketing and storytelling around it, we move the consumer fairly quickly to a new place. And what we're doing here is nothing different than that." --- (NKE, earning call, 2024/Q4)

Role of E-commerce in Retail Growth

E-commerce is pivotal for retail growth in 2024, as highlighted by Walmart's emphasis on its significance, JD.com's focus on younger consumers' reliance on online shopping, and Shopify's impressive revenue growth. Additionally, AI's role in enhancing e-commerce marketing strategies further underscores its importance in driving retail success.

"Retailers that can effectively manage supply chain disruptions, offer competitive pricing, and invest in technology will likely emerge stronger in the current environment.Additionally, Walmart's performance highlights the growing significance of e-commerce in retail." --- (WMT, press release, 2024/08/21)

"We continue to see this category is growing online. So simultaneously, we are actively developing our off-line retail networks for these categories to provide more specialized shopping experience for our users.So on the demographics, for the young generation, they grow up with online shopping, they are already highly customized - accustomed and reliant on e-commerce platforms." --- (JD, earning call, 2024/Q2)

"experience and a world class team with the depth and breadth of unique inventory on our marketplace, we're making meaningful strides towards achieving durable, sustainable GMV growth that will ensure eBay is a leading e commerce destination for enthusiasts for years to come." --- (EBAY, event transcript, 2024/06/20)

"We continue to gain market share in the US e-commerce market and abroad. Q2 revenue was $2 billion, up 21% year-over-year, which equates to 25% year-over-year growth when excluding the logistics businesses." --- (SHOP, earning call, 2024/Q2)

"The report said: "AI plays a crucial role in e-commerce marketing by allowing businesses to gain insights into customer behavior & emerging trends, encouraging the creation of highly customized advertising, marketing initiatives, & promotions." --- (AMZN, press release, 2024/08/22)

Retail Growth Metrics and Forecasts

Retail growth metrics for 2024 show positive trends, with Walmart reporting a 4.9% increase in comparable sales driven by grocery and health sectors. Costco's e-commerce surged by 22.9%, while Lowe's and Target also noted improvements in key performance indicators, indicating a robust retail environment.

"We focus on comparable sales in the U.S. as we believe it is a meaningful metric within the context of the U.S. retail market where there is a single currency, one inflationary market and generally consistent store and club formats from year to year." --- (WMT, sec filing, 2025/Q2)

"Comparable sales were as follows:
4 Weeks 16 Weeks 52 Weeks
U.S. 4.7% 5.3% 4.5%
Canada 4.5% 5.5% 7.0%
Other International 7.5% 5.7% 8.1%
Total Company 5.0% 5.4% 5.3%
E-commerce 22.9% 18.9% 16.1%
Comparable sales excluding the impacts from changes in gasoline prices and foreign exchange were as follows:
U.S. 6.7% 6.3% 5.0%
Canada 5.8% 7.9% 8.1%
Other International 10.8% 9.3% 8.4%
Total Company 7.1% 6.9% 5.9%
E-commerce 23.3% 19.5% 16.2%" --- (COST, press release, 2024/09/05)

"Comparable sales decrease 1 (5.1) % (1.6) % (4.6) % (2.9) % Total customer transactions (in millions) 230 244 437 458 Average ticket 2 $ 102.71 $ 102.35 $ 102.82 $ 103.33 At end of period: Number of stores 1,746 1,742 Sales floor square feet (in millions) 195 195 Average store size selling square feet (in thousands) 3 112 112 Net earnings to average debt and shareholders' deficit 26.5 % 23.7 % Return on invested capital 4 30.9 % 27.8 % 1 A comparable location is defined as a retail location that has been open longer than 13 months." --- (LOW, sec filing, 2024/Q2)

"For both of these metrics, average scores in the first quarter were higher than a year ago, and we saw increases in these metrics between the beginning and the end of the quarter as well." --- (TGT, earning call, 2025/Q1)

"The Walmart U.S. segment had comparable sales growth of 4.9% for the three months ended April 30, 2024, driven by growth in transactions, with strong sales in grocery and health and wellness." --- (WMT, sec filing, 2025/Q1)

Economic Factors Influencing Retail Growth

Economic factors influencing retail growth in 2024 include heightened uncertainty around geopolitical tensions and central bank policies, which could depress asset prices and market activities. Additionally, consumer spending trends show lower-income segments increasing spending, while higher-income groups are experiencing a slowdown, reflecting broader economic conditions.

"If uncertainty and concerns about geopolitical tensions and the economic outlook remain elevated or grow, including those about central bank policy, inflation, the commercial real estate sector, and potential increases in regulatory capital requirements, it may lead to a decline in asset prices, a decline in market-making activity levels, or a decline in investment banking activity levels, and net revenues and provision for credit losses would likely be negatively impacted." --- (GS, sec filing, 2024/Q1)

"Lower income segments are showing stronger spend growth, but with signs of trading down and getting a bit less for their money, whereas higher income segments are showing lower growth with slowing discretionary spend, including in travel and luxury retail." --- (JPM, Investor Day, 2024/05/20)

"This steady growth has fostered a brighter economic outlook, with more than half (59%) of surveyed U.S. SMBs expressing optimism about the future of the economy, up from 47% in 2023." --- (V, press release, 2024/06/13)

"Ted Pick: Well, it's a great question. It depends on whether rates are higher because they are sustaining continued growth in the U.S. or if they are higher for a period of time and are followed by a tough landing, in which case we're in recession and clearly then things will slow down." --- (MS, earning call, 2024/Q1)

"We see economic growth around the world in the developed markets as well around." --- (MA, conference, 2024/05/20)

Regional Variations in Consumer Spending

Regional consumer spending trends show significant variations, with the West Coast experiencing an early correction. Costco's sales data highlights stronger performance in Canada and international markets compared to the U.S., while Target notes cautious spending in discretionary categories. Amazon's regional operations have improved cost efficiency, reflecting diverse consumer behaviors.

"So we've heard from some other retailers that maybe West Coast sort of started a correction first, both on the consumer side and your regional performance, how would you describe and are you seeing any of that factor?" --- (HD, conference, 2024/04/04)

"Comparable sales were as follows: 5 Weeks 44 Weeks U.S. 5.6% 4.4% Canada 5.2% 7.3% Other International 4.3% 8.5% Total Company 5.3% 5.4% E-commerce 18.4% 15.2% Comparable sales excluding the impacts from changes in gasoline prices and foreign exchange were as follows: 5 Weeks 44 Weeks U.S. 6.3% 4.8% Canada 8.4% 8.1% Other International 8.7% 8.1% Total Company 6.9% 5.6% E-commerce 19.1% 15.2% Additional discussion of these results is available in a pre-recorded message." --- (COST, press release, 2024/07/10)

"The average transaction was also down 1.9% as consumers continue to spend cautiously, particularly in discretionary categories." --- (TGT, earning call, 2025/Q1)

"Operating margin was 5.8%, up 460 basis points year-over-year. We saw improvements in our cost to serve, including continued benefit from our work to regionalize our operations, savings from more consolidated customer shipments, and improved leverage driven by strong unit growth and lower transportation rates." --- (AMZN, earning call, 2024/Q1)

"Frequency for the month was up 6.3% worldwide and 5.1% in the U. S. Foreign currencies year over year relative to the U. S. Dollar negatively impacted total and comparable sales as follows: Canada by approximately 4.2 percent, other international by approximately 5.5% and total company by approximately 1.4%. Gas price deflation negatively impacted total reported comp sales by approximately 0.6%." --- (COST, event transcript, 2024/08/07)