Consumers Eye Discretionary Spending Cutbacks

February 21, 2023

Faced with rising costs, eating out is the first spending item on the chopping block, according to recent research. Indeed, a separate recent study [pdf] from NielsenIQ indicates that it could be a difficult year for the restaurant industry, as out of home dining/eating is set for the broadest cutback in spending intent.

As part of its 2023 Consumer Outlook Survey, NielsenIQ measured net change in spending intent for various areas, by subtracting the percentage of respondents who will be spending less in the next 12 months from the percentage who will be spending more.

The biggest net pullback in spending is for out of home dining/eating (-25% pt.s), with out of home entertainment (-22% pt.s) closely behind. Other areas in which more expect to decrease than increase their spending include clothing/apparel (-19% pt.s), food delivery/takeaways (-17% pt.s) and both international (-12% pt.s) and domestic (-7% pt.s) holidays.

By contrast, more essential items will likely witness greater spending. The biggest change will be for utilities, with a net positive spending intent of 23% pt.s, followed by groceries and household items (+19% pt.s). This is potentially a reflection of inflation, as most US consumers expect the cost of their groceries and utility bills to rise in the coming months.

Within the groceries and household items category, the report notes that CPG and FMCG are “positioned well to capture shifted demand from other areas,” with net positive spending intent particularly high for fresh produce (+22% pt.s), home essentials (+16% pt.s) and health & wellness (+16% pt.s). By comparison, prepared food & meal kits (the top subscription area under threat in the US) have a net negative spending sentiment of -9% pt.s.

Compared to last year, the same 3 areas are on top of the net positive spending intentions – Utilities, Groceries & Household Items, and Education-Self/Children’s. There appears to be considerably greater positive spending intentions this year for transport costs and rent/mortgage, while in-home entertainment has swung from a small positive intent last year to a net negative one this year. There’s also much more pessimism surrounding spending on food delivery and takeaways, while the outlook has improved (though remains negative) for gym/sports/club memberships.

On a broader scale, Consumer Goods (groceries and household items) represents the only macro area this year with a net positive spending intent (+19% pt.s). Leisure & Lifestyle (out-of-home and in-home entertainment, holidays, gym/sports/club memberships) is on the other end of the spectrum, at -29% pt.s. Food Service and Semi/Durable Goods are also set for declines in spending, each at -27% pt.s.

For more, check out the study here.

About the Data: The results are based on NielsenIQ’s Consumer Outlook Survey from December 2022.


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