Retail sales grew 4.2% YoY in February according to recently released data from the US Census. While a significant amount of this growth is due to inflation, consumers still decided to grow their spending in retail stores by a mid-single digit percentage. Non-store retailers’ sales growth (a category that mostly consists of pure-play ecommerce retailers) outpaced the overall market at 8.5% YoY. From Feb 2022 to Feb 2023, the category grew share of overall retail from 18.3% to 19.1%. Restaurants, a largely discretionary category, saw 15.1% growth in February YoY.
The key takeaway for ad sellers is that consumer spending is still relatively strong in the face of significant economic headwinds. Consumers are still spending more on products from retail stores than they did a year ago and they’re still growing spend in certain discretionary categories, such as restaurants, at a strong clip. Given the inflationary environment, they may be spending more to buy a changing mix of goods than they did a year ago, but overall they’ve been willing and able to spend more.
AP macroeconomic research fielded in February indicates that a minority of advertisers are planning on reducing advertising budgets this year and the vast majority will maintain or grow budgets compared to last year. If consumers continue their resilience, 2023 should be a strong year for advertising growth. Ecommerce’s continued dollar and share growth should bode well for performance focused digital advertising platforms, but online retailers’ goals to improve margins this year will create a headwind.
By Eric Haggstrom, Director Market Intelligence, Advertiser Perceptions
