The improving economy has left Americans with a little extra money in their pockets, encouraging many consumers to increase spending across categories, with a particular penchant to splurge on entertainment activities, according to Mintel’s latest research. This comes to the detriment of the clothing, footwear and accessories market as consumers are encouraged by the trend of spending on experiences over material goods. Consumers are holding on to a budget-conscious mindset, persisting after the recession and reinforced by retailer and manufacturer promotional activity, as seen in the household care and apparel markets, keeping sales growth in check.
While beauty and personal care consumers typically take a functional approach toward purchases, resulting in two thirds (67%) saying they spend about the same compared to previous years, a notable 17% of consumers report spending more in 2015, reflecting a willingness to spend on products with added benefits. This is balanced by consumers also cutting costs on basics such as sun protection and shaving products by trading down to lower-priced offerings, all adding up to moderate growth of 2.9% 2014-2015, with sales reaching $124.3 billion in 2015.
Much of the success seen in discretionary categories is due to the fact that Americans are more confident in their financial situations compared to years past. More than two in five (44%) Americans describe their financial situations as “healthy” in 2016, compared to 37% in 2015 and 33% in 2013, indicating that improvements in the economy are being felt at a household level.
“As the economy continues to improve, and Americans settle into ‘healthy’ financial situations, our research shows that consumers are interested in spending discretionary income on vacations, leisure and entertainment experiences,” said Dana Macke, senior lifestyles and leisure analyst at Mintel. “However, some Americans are still struggling to find a balanced approach to spending. In an attempt to spend prudently while still enjoying whatever extra they have, consumers are trading down in categories like household care and seeking out lower priced options for basic beauty and personal care needs, while allowing themselves modest luxuries like a nice dinner out.”
A reliance on beauty and personal care staples has resulted in slow but steady market growth of 17% between 2010-15, reaching estimated sales of $124.3 billion. While most consumers are spending the same amount on beauty purchases in 2016 (67%) as they have in the past (vs 65% in 2013), Mintel research indicates that some consumers are beginning to shift away from lower-priced options and are spending more for products with added benefits, as 16% of beauty retailing consumers purchase products to upgrade their existing collections. This is especially true of grooming staples like hair care as natural hairstyles are trending, driving consumers to seek healthy-looking hair and boosting sales of conditioners as well as products touting smoothing and moisturizing claims.
The household care products market has experienced only minimal growth in recent years, rising just 3% 2010-15 to an estimated $47 billion. A budget-conscious mindset persists long after the recession, keeping sales growth in check. Household care consumers balance their continued focus on economizing with strong interest in products that offer greater convenience, cleaning performance, and safety, as 47% of household care consumers say easy to dispense is a top purchase driver, along with safe (43%) and easy (31%) to use.