Americans continue to tighten their belts and flock to retail giants' own brands

According to the latest data, US consumer confidence fell again in February, and expectations for the future are still at a level that indicates an impending recession. Against this backdrop, more and more people are turning to buying private-label goods from retail giants, and various brands are taking steps to seize the market. These brands will become rivals that cannot be ignored by cross-border e-commerce sellers going overseas.

U.S. consumer confidence falls as recession fears grow

According to data from the Conference Board, a nonprofit research organization, the U.S. consumer confidence index fell for the second consecutive month in February to 102.9 from 106 in January, lower than Wall Street's previous forecast of 108.

The expectations index, which measures consumers' attitudes toward the health of the economy over the next six months, also fell to a seven-month low of 67.9. The report said that a reading below 80 typically indicates a recession next year, and the expectations index has been below 80 for 11 consecutive months in the past 12 months.

Uncertainty about the U.S. economy is dampening consumer confidence and spending expectations. The median forecast for household spending growth fell to 5.7% in January 2023 from 5.9% in December, the lowest since January 2022, according to the New York Fed. This is the third consecutive decline in expectations.

Meanwhile, the median expected growth rate for household income fell 1.3 percentage points to 3.3%, the largest single-month drop in the past 10 years.

The committee's senior director Ataman Ozyildirim said the decline in consumer confidence reflects a "substantial drop" in household confidence among households with incomes of $35,000 or more and those aged 35-54. It is expected that spending cuts will become the mainstream consumption trend in the first half of this year.

Retail giants' own brands become consumers' favorite

According to a study by Attest, 73% of American consumers have become interested in private-label products from retail giants due to inflation and plan to continue buying them when the economy improves, while only 9% say private-label products are a temporary substitute for them.

Last June, the Food Industry Institute (FMI) released a report stating that 41% of consumers bought more private label goods last spring than before the pandemic. Compared with special offers and promotions, lower prices are the main reason that attracts consumers to buy private label goods.

In addition to the impact of inflation, the investment of major retailers in the quality and price advantages of their own-brand products in recent years has also attracted many brand-loyal customers. In 2021, a survey by FMI found that 91% of food retailers and manufacturers plan to increase their investment in private brands in the next two years. In addition, 58% of companies said they are expanding and improving their product lines.

Recently, major retailers have begun to launch product lines under $5 to attract customers. For example, Target recently announced that it will start selling more private-label products under $10, and it revealed that last year, the company's sales of $3 decorations, $5 candles and $10 pillows grew strongly.

In addition, as the recent sharp drop in ocean freight prices has provided room for retailers to further reduce the prices of their own-brand products. As the quality of their product categories continues to improve, they will also become a strong competitor to cross-border sellers going overseas.

Editor✎ Ashley/

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