Report: Annual Spend Is Up While Consumers Offset Rising Costs

Annual spending per consumer has increased to $10,471, up $440 compared to a year ago, according to new research from Circana (formerly IRI and The NPD Group).

Leveraging consumer purchase data across CPG, foodservice and general merchandise sectors, Circana's research provides a comprehensive view of the complete wallet, including insights into spending patterns and the trade-offs consumers make both at-home and away-from-home.

To offset rising costs, consumers are spending less on products that were popular during the height of the pandemic, such as technology, liquor and home care, and more on dining out and necessities like in-home food/beverage and pet care, according to Circana’s findings. However, trade-offs vary widely among consumer segments and age demographics as shoppers prioritize their unique needs. 

“Food will always be consumers’ priority in tough and good economic times, whether eaten at or away from home,” according to Circana food and beverage and foodservice industry analysts who spoke in March at the market research company’s inaugural Growth Summit in Las Vegas. When faced with higher prices, consumers will find ways to reduce or reallocate at- and away-from-home food spending, like trading down to private label, buying in bulk or using more leftovers.

Key findings from Circana’s research indicate: 

• Millennials are spending more on food, dining out, tobacco/e-cigarettes and the convenience and drug channels, and less on technology, home textiles and office supplies. They’re prioritizing themselves and putting the pandemic behind them.
• Gen Z consumers don’t spend as much money eating out, but they have an affinity for delivery services and are leading the pack when it comes to ordering foodservice online. 
• Hispanic shoppers have largely reverted back to their pre-pandemic purchasing habits, spending more on beauty, footwear and automotive, and less on team sports, alcohol and home improvement. They also spend 17% more than average on foodservice. 
• High-income households are driving growth for the health and vitamin channels, and indulging in beauty products, accessories, handbags and auto care, and spending less on video games and sports equipment.
• Low-income SNAP shoppers have pulled back on discretionary spending, reducing spend on non-food items at over three times the rate of food and beverage.

“In today’s complex consumer landscape, it’s essential to meet shoppers where their needs are, identify high-opportunity households and pinpoint where they live and shop,” Patty Altman, executive vice president, consumer and shopper insights, Circana, said in a recent media release.

Of the $2.9 trillion in consumer retail spending Circana tracks, food and foodservice spending represents the largest share, nearly $1.5 trillion, according to a separate release from IRI. Food inflation for the 12 months ending February 2023 was 10.2% at home and 8.4% away from home. David Portalatin, Circana food and foodservice industry advisor, told Growth Summit attendees that some of the declines in discretionary retail spending last year were due to the need to fund higher spending on food and beverage, per the release.

Circana’s research leverages scan panel and receipt panel data to provide a precise, omni-view of the consumer’s wallet, with insights into consumer buying behavior in-store, online and on premise. 

The NPD Group and IRI completed a merger in 2022, and in March of this year, the joint company rebranded to an acronym-free name: Circana. The two entities still operate their own websites.