Consumer spending is beginning to show signs of recovery going into the summer, but major retailers are not getting their hopes up.
Findings from the National Retail Federation’s CNBC/NRF Retail Monitor announced Monday (June 10) showed that in May, consumer spending increased 1.35% relative to April, the highest month-to-month rise recorded in more than a year, and spending was up nearly 3% year over year.
“Consumers have clearly retained their ability to spend and are driving solid economic growth,” NRF President and CEO Matthew Shay said in a statement. “Spending is being supported by the job market and real wage gains. Inflation remains stubborn but is almost entirely in services rather than retail goods.”
Yet major retailers are, for the most part, still seeing consumers show signs of conservative spending.
“Many consumer pocketbooks are still stretched, and we see the effect of that in our business mix, as they’re spending more of their paychecks on non-discretionary categories and less on general merchandise,” John David Rainey, executive vice president and chief financial officer at Walmart, told analysts on the retailer’s earnings call last month.
Similarly, on a call Thursday (June 6) discussing Big Lots’ first-quarter fiscal 2024 earnings results, President and CEO Bruce Thorn called out “continued pullback in consumer spending by our core customers, particularly in high-ticket discretionary items.”
Target, meanwhile, is seeing consumers make room in their budgets for nonessential splurges — but not on retail products.
“Business trends continue to reflect a normalization in spending patterns that first emerged more than two years ago, a pattern where consumers are remixing their spending back into services and entertainment outside of their homes after curtailing those activities during the pandemic,” Target Chairman and CEO Brian Cornell told analysts on an earnings call in May. “This normalization, combined with the cumulative impact of higher prices on consumer budgets, is resulting in continued soft trends in discretionary categories.”
In recent months, consumers have continued to feel the economic pressure. The April edition of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report” series found that the average consumer has three months of income saved, and 58% of consumers live paycheck to paycheck.
Plus, the February/March edition of the report revealed that 60% of consumers have reduced the quantity of their nonessential retail purchases due to price increases, and half have switched to cheaper merchants.
Even the NRF’s own data showed continued caution. Despite the increase in spending, the NRF still predicted that consumers will shell out less on gifts for their dads this Father’s Day than last year.
As such, economic pressures continue to influence consumer behavior, leading to conservative spending patterns. Inflation in services and the lingering impacts of the pandemic on spending habits persist, prompting retailers to see consumers prioritizing essential expenditures and experiences over general merchandise and discretionary items.
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The business landscape is challenging, but firms are increasingly flush with innovations designed to beat back any operational challenges with cutting-edge tech.
Artificial intelligence, for example, has become a linchpin of modern financial operations, reshaping processes from fraud detection to credit risk assessment. As companies warm toward harnessing AI-powered algorithms, efficiency and precision are being positioned at the forefront of operational improvement.
At the same time, B2B payments are undergoing a parallel transformation.
Legacy systems, which often relied on manual processes and paper-based invoicing, are being replaced by streamlined, digitized platforms. Businesses are turning to integrated payment solutions that enhance efficiency, security and transparency.
What is the reason for the accelerating digital transformation of back-office technology stacks and payment workflows?
A prominent root cause is the ongoing uncertainty afflicting the business environment. This includes escalating trade tensions marked by the imposition of tariffs, which have introduced a wave of hesitation across various sectors, impacting middle-market companies.
As economic uncertainties persist, financial management has become paramount, and, as the B2B news this week shows, few things support agile decision making and real-time forecasting better than the digitization of previously manual workflows.
Read also: AI Agent Systems Are Here — Will They Transform B2B?
One of the trends in B2B is the integration of AI-powered solutions to enhance operational efficiency. The adoption of agentic AI solutions is being explored to empower chief financial officers and treasurers by enabling autonomous financial decision making and operational efficiency.
Payments technology firm Transcard announced Tuesday (April 1) that it added agentic AI capabilities to its vendor network management solution. The changes to the company’s SMART Exchange are designed to streamline payment interactions between buyers and suppliers, with agentic AI automating onboarding and know your business (KYB).
Tesorio added an AI agent for supplier portals to its platform for accounts receivable automation, collections and cash flow management Thursday (March 27). The company’s new Supplier Portals Agent autonomously manages portal-based invoicing, from invoice submission to payment tracking, eliminating the need for finance teams to submit and track invoices across portals, a task that Tesorio said has become “one of the most manual, fragmented and error-prone parts of the AR process.”
AI-driven platforms can offer CFOs and treasurers insights and analytical capabilities, helping them navigate complex finances. The collaboration between agentic AI and financial operations is one potentially poised to unlock growth by empowering executives to make data-driven decisions with greater confidence.
See also: How CFOs Can Solve for Resource Bottlenecks in Back-Office Innovation
Beyond AI, the B2B sector is witnessing innovation in payment systems and risk management. Mastercard, for instance, launched a program Monday (March 31) aimed at encouraging the adoption of virtual cards for commercial payments. The initiative seeks to provide businesses with a more seamless, consumer-like experience, particularly in the realm of digital transactions.
Meanwhile, EasyPost on Tuesday introduced Forge, a B2B shipping solution designed to optimize logistics and reduce costs for enterprise clients. The development highlights the growing demand for specialized solutions that address the unique needs of B2B commerce, where efficiency and cost-effectiveness are paramount.
Risk management remains a concern for businesses operating on a global scale. To address this, Zip, also on Tuesday, rolled out a supplier risk management solution aimed at helping organizations assess and mitigate potential vulnerabilities in their supply chains. As geopolitical tensions and supply chain disruptions persist, such tools are key for maintaining operational resilience.
See also: What Treasurers Can Learn From How Central Banks Approach Risk
The ongoing evolution of FinTech is also shaping how businesses manage their assets and navigate economic uncertainties. A growing number of treasurers are turning to unconventional assets like bitcoin and gold as part of broader capital allocation strategies. The trend reflects a desire for diversification and a hedge against currency volatility, particularly as inflationary pressures and geopolitical risks continue to loom.
For CFOs, the challenge of maintaining financial visibility in a volatile environment is ever-present. Enhanced financial visibility tools are proving essential in navigating tariff uncertainties and ensuring liquidity management remains robust. These tools empower executives to forecast potential disruptions and respond proactively rather than reactively.
Supply chain transparency is another area receiving heightened attention. Inspectorio’s partnership with Open Supply Hub aims to promote greater transparency through open data platforms. The collaboration is intended to enhance accountability and ensure that sourcing practices adhere to evolving regulatory and ethical standards.
Looking forward, the question is not whether these technologies will continue to gain traction, but rather how quickly and effectively they will be adopted at scale.
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