Retailer Challenges and Successes with the Cautious Consumer
This blog post includes highlights from our 3Q24 Pictures for PM presentation, showcasing trends that have shaped the year so far and continue to influence the retail landscape as we head deeper into Q4.
While back-to-school and Labor Day promotions appear to have driven a slight increase in consumer spend growth in late August, overall it seems that US consumers in 3Q continue to spend cautiously. The operating environment for US retailers remains challenging, with a 2H rebound fading and general weakness persisting throughout September across many categories.
The (Continued) Cautious US Consumer
According to YipitData’s Consumer Spend Index (YCSI), which measures consumer spending across nearly 700 merchants, US Consumer spending has grown cautiously this year. The YCSI indicates that consumer spending growth remains pressured YTD though Back-to-School and Labor Day activities provided some lift in late August and early September, with Sporting Goods, Clothing, and Furniture categories benefiting the most. In aggregate, YTD consumer spend is up just slightly from 2023.
YipitData Consumer Spend Index (YSCI): Rolling T14-day retail sales ex-Gas Stations, not seasonally adjusted
Which companies are feeling the impact most acutely?
1) Companies with exposure to big ticket purchases and housing
Companies that are exposed to big ticket items that are tied to housing–like appliances–have been weak since roughly the start of the summer, or in some cases even earlier.
2) Companies exposed to the low-end consumer
Low-end consumer spending has also weakened recently. This trend emerged in April and has appeared across our discount retail coverage in particular.
What companies are finding ways to succeed?
1) Retailers with a strong assortment
Some retailers with strong assortment in offering are outperforming despite macro headwinds. Within our coverage, DKS is a notable example of this, offering Hoka, Stanley, Yeti, and On. If you strip out the impact that those brands have on the top line, DKS business looks remarkably similar to ASO in terms of growth, supporting the thesis that category breadth across popular products is really helping DKS win.
2) Brands with hit products
ANF is also leaning into hit products across categories, with their turnaround story lifted by the launch of the Wedding Shop earlier this year. YPB and NFL merch are now being watched closely as potential drivers of growth this fall.
ANF is also leaning into hit products across categories, with their turnaround story lifted by the launch of the Wedding Shop earlier this year. YPB and NFL merch are now being watched closely as potential drivers of growth this fall.
Perhaps no other brand demonstrates success across a wide swath of categories like SN. The company saw significant growth from ice cream, slushy, and drink makers throughout the summer, with additional kitchen appliances and vacuums likely to support growth into the winter season.
The content above includes a snippet of the analyses presented in YipitData’s 2Q24 Pictures for PM’s presentation. Download the full, 100+ page slide deck here.
Our Research Analyst team also conducted a webcast going over the highlights from the presentation, watch on-demand here.
These insights remain critical as we analyze how retailers navigate the transition from 3Q to the high-stakes holiday season.
