Study: Who’s Splurging On What Items?
Consumers said they would spend in 2023, but their intent to splurge by demographic has not come to fruition, according to the McKinsey & Co. U.S. consumer survey fielded April 18–24.
In April, at least half of Gen Z and Millennials in every income group said they would splurge, but McKinsey reported year-over-year spending declined across all income groups that month, and the trend has extended through June.
Consumers said they would mostly splurg on food, travel, and apparel this year.
Some 38% said they intend to splurge on restaurants too, followed by groceries (37%), travel (36%), apparel (35%), beauty and personal care products (29%), footwear (27%), and electronics (25%).
Home goods, jewelry and accessories, and out-of-home entertainment each took a 21% share.
Products most sought during the height of COVID-19 have dropped to the bottom of the list in terms of things consumers plan to splurge on this year. Vehicles dropped to 20%, fitness products to 19%, and household essentials to 17%.
While most U.S. consumers feel optimistic about the future of the economy, they are not financially confident to go on spending sprees.
In fact, most consumers across the United States have traded down and are watching pennies, but still plan to splurge selectively.
Rising prices have caused most consumers to look for savings. Four out of five consumers say they’re now trading down — whether by switching to a different pack size than what they normally buy.
About 40% of consumers participating in the study say they intend to splurge at some point on something in 2023.
That percentage has stayed the same since late 2021.
Higher-income Millennials are at the forefront of this trend, with 70% saying they’re ready to splurge, according to another McKinsey survey fielded, Feb. 24 through March 1.
Year-over-year spending declined across all demographic groups, but consumers with lower incomes showed the largest rate of decline in June 2023, according to the report.
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