(ReclaimingAmerica.net) – Big retail giants, such as Costco and Macy’s, have suggested that changes in shoppers’ behavior could be a warning about the state of the American economy.
Both chains indicate in new forecasts that their clients have altered what they buy and have been pulling back, CNN Business reports.
Costco’s chief financial officer Richard Galanti recently said some customers were abandoning expensive beef and steaks for less costly alternatives, such as pork and chicken.
He noted a similar trend had been observed in past periods of economic recession.
On Thursday, Macy’s decreased its sales and profit forecasts due to a slowdown in customer demand.
“The US consumer, particularly at Macy’s, pulled back more than we anticipated,” Macy’s CEO Jeff Gennette pointed out in an earnings call.
He noted the department store chain saw its customers “reallocate” their spending on essentials, food, and services.
Gennette added the company would boost its promotions to “clear out unsold merchandise.”
The report informs that Macy’s same-store sales decreased by 8.7% in the first quarter of 2023. At the same time, Bloomingdale’s, a higher-end department store, saw its sales drop by 3.9%.
“Macy’s and Costco appeal to middle- and higher-income shoppers, and their results show a pullback among that demographic,” CNN Business comments.
It notes that people in that customer demographic have purchased electronics, clothing, and furniture, among others, during the past three years, since the start of the COVID-19 pandemic.
Many consumers are shifting their discretionary spending to travel and other services, such as dining out, which weren’t widely available during the coronavirus pandemic.
“Macy’s significant earnings guidance reduction underscores the challenges facing retailers given a softening consumer spending environment and shifts in budgets toward services,” commented David Silverman, a senior director at Fitch Ratings.
The report stresses that lower-income shoppers’ discretionary spending is also slowing down as that demographic has “less money” for such purchases.
Variety stores chain Dollar General said its buyers abstained from discretionary products like clothes and home goods.
“The macroeconomic environment is more challenging than the [company] had previously anticipated… [That’s] having a significant impact on customers’ spending levels and behaviors,” its statement added.