Every month, we reach out to retail industry leaders in order to gain their perspective on the market. This month, we asked: What are your thoughts on consumer spending trends in the retail realm?
Josh Poag, President/CEO, Poag Development Group
Right now, I am tentatively optimistic. In our centers, 2023 was flat or even down a little bit overall from 2022. Thus far, 2024 has started out well. Across retail categories, we are seeing solid sales. Men’s fashion in particular is up by a strong margin. Dining has been on a steady trend upwards since COVID-19 and appears to be continuing on that trajectory.
After the drop in 2020 and the resulting bumps in 2021 and 2022, I think the economy has mostly worked through the COVID-19 disruptions. We are seeing a return to normal trends.
The major trend I am keeping an eye on is consumer confidence. It dropped with the increase in rates last year and the fear of a recession. Today, recession fears have dropped as political fears have increased. I believe consumer confidence has bottomed out and will start trending upwards as rates drop a little bit more and we get past the election at the end of the year. I expect consumer spending to increase this year, albeit not by a lot.
Laura Barr, Head of Retail, Americas, CBRE
Despite some headwinds, the fundamentals remain strong to support the trend of continued consumer spending. Wage growth is now outpacing inflation (dollars go further), the percentage of credit limit used is at a historic average, debt service as a percentage of disposable household income is still below long-term averages and we have seen a recent increase in debt service for homes being paid down while values have grown (the latter only relevant to a portion of the population). One of the more interesting, specific trends is the continued growth in restaurant spending, a completely discretionary category.