US consumers showed signs of tightening their belts in the first quarter, cutting back on spending for food and other consumer packaged goods.
Unit sales of total CPG items fell in Q1 2017, according to market research firm IRI, which studies actual sales of products at retailers from Walmart to drugstores and supermarket chains. Consumers buying fewer CPG items led to monthly sales declines in both January and February, compared to gains during the same period in 2015 and 2016, IRI data showed.
(To be sure, in a comforting sign, the rate of the unit decline slowed heading into the end of the quarter. And the dollar value of the sales, after declining in January and February, actually eked out a slight sales gain in March. IRI, citing improved GDP, unemployment rate and other 2017 economic forecasts from Moody’s, said the industry outlook remains positive for the rest of the year.)
There are some clues behind the spending cutback: 50% of consumers said they are making sacrifices to make ends meet and 29% of them said they are having difficulty buying needed groceries, both up 1 percentage point from a year earlier, an IRI Q1 online survey of more than 2,000 consumers 18 and older showed. More than two-fifths of the respondents, or 45%, said their household financial health is strained.
But for millennials, the situation looks to be worse: the percentage of them facing those challenges ranks at the top on all three measures. For instance, 55% of the millennials, which IRI identifies as ages 18 to 34, said they are sacrificing to make ends meet.
As a result, millennials are again leading other demographics in the way they save money. For instance, 89% of them said they buy private-label brands and 86% of them shop lower-priced brands, beating the total population average of 81% and 74%, respectively. Meanwhile, a higher percentage of them said they download coupons from online deal sites.
Not surprisingly, the only area where millennials, many of whom so-called “digital natives,” trail other groups is in clipping coupons from circulars and newspapers.
“Millennials tend to be more focused on money-saving efforts than other generations, largely because the need has been more,” Susan Viamari, vice president of Thought Leadership for IRI, told eMarketer Retail. “They are generally more open to private label than other generations—they are seeking solutions, rather than specific brands.”
Millennials not only face economic pressures typical of being young—student loans being a significant part of that—but thanks to the timing of the Great Recession, they have faced economic instability for most of their professional careers, IRI said.
That said, Viamari said millennials, who she said are generally more optimistic about the future, are willing to pay more for things that matter most to them.