In 2024, discretionary spending showed modest growth, with a significant boost in the final weeks of the year. According to Circana, a market research firm, U.S. discretionary retail dollar sales increased by 9% and unit demand grew by 5% during the five-week period ending January 4, compared to the previous year. The growth in December was partially driven by the shift of Cyber Week to December from its usual November timing.
However, post-holiday spending in January returned to a more baseline performance, with consumers focusing more on needs and value. During the weeks ending January 11 and 18, discretionary spending remained flat year-over-year, while unit demand rose by 1%.
External factors, such as a winter storm, extreme cold, and Southern California wildfires, also impacted retail performance during this period.
Despite the post-holiday slowdown, spending on essentials like food and consumer packaged goods (CPG) continued to rise, reflecting sustained demand. According to Marshal Cohen, Chief Retail Industry Advisor at Circana, consumers are taking a break from post-holiday spending while adjusting to higher prices on non-discretionary items and new distractions.
Looking at the entire holiday shopping season, from Black Friday to the end of the year, discretionary general merchandise saw 2% dollar growth and a 1% increase in unit sales. Total retail sales, including food, beverage, and CPG, grew by 2% in dollars and 1% in units.
Cohen notes that the consumer resiliency shown during Holiday 2024 and the year’s overall retail performance are promising signs for the retail industry. However, he emphasizes the need for marketers to be prepared for ongoing distractions, which may influence product purchases and spending timing as consumers continue to prioritize immediate needs.
