Consumer Spending Trends: High-Income Households Drive Spending While Others Pull Back

Consumer Spending Behavior

• 💡 A survey of over a thousand consumers reveals that the broad consumer base is pulling back, spending less than last year.
• 🎯 However, the top 10-20% of household earners in the USA are increasing their spending.
• 📉 Conversely, the bottom 50-70% of earners are holding back on spending.

Shopping Habits and Retail Space

• 🛒 Consumers with less disposable income are shifting their shopping habits towards discount retailers like Walmart, Target, Dollar General, and TJX, rather than higher-end stores like Nordstrom.
• ⏳ Retail real estate decisions are being made for 2027-2028, with retailers generally bullish on the long-term consumer outlook, focusing on two to three years ahead rather than immediate trends.

Factors Influencing Consumer Confidence

• ⚠️ Several factors are contributing to consumer unease, including a soft job market, ongoing discussions about tariffs and their potential cost implications, and general global stress from wars.
• ⚖️ Consumers are increasingly prioritizing needs over wants, leading to reduced discretionary spending.

Retail Real Estate Dynamics

• 📈 The retail industry is experiencing a long-term supply shortage in retail real estate, with current delivery rates significantly lower than during the 2000s heyday.
• 🏢 Retailers are focusing on second-generation space due to the scarcity of new development, with significant new construction only occurring in states like Florida, Georgia, and Texas.
• 💻 The shift to online-only shopping is minimal, with 84% of surveyed consumers indicating they will continue to shop at brick-and-mortar stores.