From Travel to Coffee to eCommerce, Consumers are Pulling Back

Consumers are thinking twice before pulling the trigger to buy even everyday items — a hesitation to spend that’s evidencing itself in slowdowns and headwinds for all manner of firms across all avenues of commerce.

There’s resilience, to be sure, but the resilience looks to be flagging, at least a bit, and depending on where you look.

The pressures have been in place for some time.

As PYMNTS noted in February, coming off the holiday shopping season, 32.5% of consumers had said that they’d reduced the quality of items that had bought, and more than 61% of consumers said they’d been cutting down on the number of items that they’d been buying.

More recently, and at a high level, retail sales data has shown that as recently as June, sales were flat. The data shows that big-ticket items have been on the downswing, a finding corroborated by earnings. Even Amazon has not been immune from consumer cutbacks.

What follows is a sampling of what’s been happening amid earnings thus far — offering a mosaic of where the pullback has been, and where it may continue to prove a trend.

Curtains for the Home Furnishing Spending?

We’re being a bit dramatic here. None of this is to say that the home furnishing industry will fall entirely by the wayside. But the frenzy of the pandemic — where consumers bought new properties and outfitted them, or simply decided to spruce up the existing homestead — is abating, at least for now.

As detailed in the latest earnings report, Wayfair saw its quarterly sales dip amid continued pressure on home goods consumers.

“Customers remain cautious in their spending on the home, and our credit card data suggests that the category correction now mirrors the magnitude of the peak-to-trough decline the home furnishing space experienced during the great financial crisis,” Wayfair Co-founder, Co-chairman and CEO Niraj Shah said at the beginning of the week.

The company’s second-quarter earnings showed total revenues dipping 1.7%, with U.S. revenues down 2%. Wayfair also saw a 2.9% decrease in the number of orders delivered, as well as a 2.4% decrease in orders by repeat customers.

Stepping Away From Getting Away From it All

A host of travel-focused firms and platforms have also posted slowing growth, with last-minute bookings indicating that consumers and families might be thinking long and hard as to whether the trips are affordable.

Disney is seeing what it has termed a moderation in demand for its Parks business, where revenues were up a scant 2%.

Airbnb said that shorter lead times have been the norm the past month, which is what happens during times of macro uncertainty. Revenue growth, which had been in the 11% range in the latest quarter, looks set to slow to a guided 8% to 10% range.

Making the Coffee at Home?

The above categories are big-ticket items, but even smaller purchases are seeing some pullback.

Starbucks showed in its latest earnings results that store traffic was down 6% in the U.S.

Asked by analysts on the call about that pullback, CEO Laxman Narasimhan said: “We are operating in a challenging consumer environment. You see the impact of that in away-from-home consumption. If you look at our business at home, the grocery stores with our brands, you’re seeing volume increase, you’re seeing share increase in a category that’s in decline, but we see volume increase at home.”

The implication here is that folks are bringing their morning jolt in house, so to speak.

As for paying for it all, consumer borrowing rose less than expected in June, and revolving credit actually declined, pointing to at least some hesitation to use cards as well as an inclination to pay down debt where possible.