KPMG: Consumers will spend more in these product categories

Retailers operating in two specific verticals may have a bright winter in store.

According to the new “KPMG Consumer Pulse Winter 2023” report, based on a survey of 1,000 U.S. consumers, 58% of respondents anticipate they will spend more on groceries in winter 2023 than in winter 2022, while 54% expect to spend more on automotive purchases year-over-year.

Respondents anticipate a 15% increase in grocery spending and an 11% increase in automotive spending compared to winter 2022. No other product category reported more than half of respondents expecting to spend more year-over-year. Other category responses (percentage of respondents who expect to spend more) included:

• 42% toys.
• 41% furniture.
• 38% hobby supplies.
• 38% restaurants.
• 34% electronics/appliances.
• 32% office/school supplies.
• 32% apparel.

Top reasons respondents gave for expected increases in grocery and automotive spending included:

Grocery

• Price increases (91%).
• Eating more meals at home (27%).
• More people in my household (13%).

Automotive

• Gas price increases (79%).
• Driving more (28%).
• Toll increases (19%).

Other interesting findings include:

• More than four in 10 (44%) respondents reported an average increase in household income of 16%, while 21% of respondents reported a decrease of 31%, making income relatively flat from 2021 to 2022.

• Consumers expect to spend less online across all categories in winter 2023 compared to winter 2022.

“The January monthly retail sales report surged well beyond expectations, although the year over year result was perfectly in line with inflation,’ said KPMG consumer and retail leader Matt Kramer. “Our most recent consumer pulse survey showed consumers have largely better or equal pay, and are becoming fairly savvy at managing their household budget through shopping around, finding promotional discounts and deferring large purchases. Consumers will spend more in 2023 on essentials, particularly grocery, automotive and personal care, and also not miss out on events and experiences with select discretionary categories like travel and restaurants proving to be winners.”
 

Consumer sentiment at 13-month high

Lowering inflation helped give a boost to consumer sentiment in early February.

Overall consumer sentiment rose to 66.4, the highest reading since January 2022, according to the University of Michigan’s Surveys of Consumers preliminary February reading. It was up from 64.9 in the prior month. The survey's measure of current economic conditions increased to a reading of 72.6 in early February from 68.4 in January. The gauge of consumer expectations dipped to 62.3 from a reading of 62.7 the previous month.