Insights into U.S. market consumption trends: These categories will explode in the second half of the year

According to the latest data released by Insider Intelligence, in the second half of 2023, clothing sales will be boosted by the back-to-school and holiday seasons, and consumer electronics purchases will also make a comeback. However, demand in the home improvement market will continue to be weak.

Clothing sales slump in the first half of the year

- In the first quarter of 2023, clothing retailer Gap's net sales fell 6% year-on-year due to weak consumer demand and economic recession.

- In June, Nike reported its first profit decline in three years, despite a 5% year-on-year sales increase.

- Victoria's Secret's net sales fell 5% year-over-year in the first quarter of 2023, which the company said was partly due to customers facing an "uncertain macro environment" and fierce promotional competition.

U.S. consumer confidence hit a two-year high last month as inflation eased and prices began to fall.

Insider Intelligence expects apparel sales to surge as we head into the back-to-school and holiday seasons, but consumers remain cautious about spending on discretionary items as student loan payments resume this fall.

Insider Intelligence analyst Suzy Davidkhanian believes that the second half of this year should be better than the first half, especially with the popularity of the "Barbie" movie, all things pink will be popular. Another analyst Sky Canaves believes that many consumers have adopted a "wait-and-see" attitude towards purchases, so retailers may have to offer discounts.

Electronics buying boom returns

The pandemic has boosted sales of electronics as consumers have more time to work, study and watch from home, and many households are not buying as many gadgets due to their longer lifespans.

Best Buy's comparable sales fell 10.1% in the first quarter ended April 29 from a year earlier as consumers pulled back on spending.

Sales of computers and consumer electronics will grow just 1.1% this year, below the current rate of inflation, according to Insider Intelligence.

Back-to-school shopping is expected to boost sales of consumer electronics, according to the National Retail Federation. More than two-thirds (69%) of back-to-school shoppers plan to buy electronics or computer-related accessories this year. Total electronics spending is expected to reach a record $15.2 billion this back-to-school season.

Analyst Andrew Lipsman predicts a comeback in consumer electronics purchases. “There are no signs of a rebound in demand yet, but strong sales of back-to-school electronics (led by laptop purchases) and potential growth in smartphone sales could boost the category,” he said.

Weak demand for home improvement

Many consumers made home improvements while stuck at home during the pandemic, so few made major updates this year. In addition, high home prices combined with high interest rates have also caused the U.S. real estate market to cool sharply.

Home Depot's sales fell 4.2% in the first quarter from a year earlier, its biggest revenue drop in more than two decades.

- Lowe's also saw a decline in net sales in the first quarter, down 4.3% from the same period last year.

Insider Intelligence pointed out that some American families may make small-scale renovations, but most people will "hold back" until they need to upgrade. In addition, the U.S. real estate market will continue to be sluggish, but it may start to pick up in the second half of the year.

Insider Intelligence predicts that with no home improvement-specific sales events or holidays in the second half of this year (or ever), sales in the category will remain subdued.

Editor ✎ Nicole/

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