According to department store chain Macy’s — as reported by CNBC Thursday (April 7) — that’s a question some consumers may be asking themselves this year as inflation puts pressure on low-to-middle income consumers.
“The biggest challenge that we’ve had in terms of thinking about managing through the beginning of 2022, is where is the demand going to come from,” Macy’s Chief Financial Officer Adrian Mitchell said during J.P. Morgan’s annual Retail Round-Up event.
“We do believe the demand is out there,” he said. “We do believe that the consumer is going to be spending. But are they going to be spending on discretionary items that we sell, or are they going to be spending on an airline ticket to Florida or travel, or going out to restaurants more?”
He added that these questions have Macy’s taking pains to plan its merchandising. For example, the company doesn’t want to order too many beach products or too much luggage if consumers won’t be spending on those items this summer.
CNBC noted that some impacts of inflation are already being felt, with consumers spending 59% more on average gas and convenience stores than last year.
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As PYMNTS reported earlier this week, there’s growing evidence that shoppers feel pinched when buying consumer packaged goods (CPGs) and are moving from name brands to discount labels and store brands.
Learn more: Shoppers Duck Name Brands as Inflation Takes a Bite out of Grocery Budgets
During the pandemic, name brand CPGs soared as consumers stocked up during the first lockdowns, seemingly unconcerned about price. Then inflation began rising, with the food index climbing to levels not seen since 1981.
Macy’s said Thursday that it has seen a lessening in demand for some home goods and casual apparel, items that were popular amid the pandemic. On the plus side, people are holding weddings again, driving sales of dresses, cosmetics and men’s tailored clothing. All the same, Mitchell said the retailer is cautious.
“Even though the consumer is healthy, we do see that inflation is elevated more so than what we expected coming into the year,” he said. “And we also recognize that the supply chain disruptions are not solved.”
