Comment on People aren't spending like they used to and it's forcing companies like Nike and Walgreens to make drastic changes

dreuter@businessinsider.com (Dominick Reuter), Business Insider
Sat, 06/29/2024 - 2:07am

People aren't spending like they used to and it's forcing companies like Nike and Walgreens to make drastic changes

American consumers are getting tighter with their wallets and pickier about deals.Vickie Flores/In Pictures via Getty ImagesUS consumer spending — especially on physical goods — has been in a yearlong squeeze.Even as inflation cools, high prices are still putting a dent in household budgets.The increased frugality means retail brands are having to balance creativity and discipline.US consumers are in a weird place this summer.People are still spending money, but there's an uncomfortable awareness that years of price hikes mean each dollar doesn't go as far as it used to.Over the past year or so, US shoppers have been dialing back on buying physical goods while still springing for travel, restaurants, and other experiences.And even though prices have largely slowed from their pandemic-era increases, they're still up roughly 20% from 2020 and unlikely to tick back down.That's putting a sizable dent in household budgets.Joseph Lewis, 33, told Bloomberg he has been looking for ways to preserve the financial cushion his family managed to pull together in 2021."We're in a space where we have to be financially creative in terms of really figuring out what it is you can do without and even what it is that you can perhaps do on your own," he said.Now, retail brands are feeling the pinch from this slow-moving slowdown.This week, both Nike and Walgreens reported earnings that were challenged by declining sales.The shoemaker responded by saying it would reallocate $1 billion to "consumer-facing" initiatives to spur demand, while the drug store said it would close a "significant" portion of more than 2,000 underperforming locations in the next three years.Meanwhile, Lowe's CEO Marvin Ellison said things are going more or less according to plan for the home improvement retailer, which is to say not great."This consumer remains very cautious, specifically when you think about larger ticket discretionary purchases," he told Oppenheimer analysts Wednesday.

 

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