KANSAS CITY — American consumers may be becoming more comfortable with their financial situation. While several drags remain on the U.S. and global economy, market researchers are noting that consumer spending appears to be turning around.
For example, Mintel International’s annual comparative audit report, “American lifestyles 2014,” indicates renewed consumer spending is in line with pre-recession trends and consumer optimism is higher than it’s been in years. In 2013, Mintel estimates that personal consumption expenditures on consumer goods reached $10 trillion for the first time. Mintel said the outlook for 2014 continues the positive trend with spending expected to increase further by 3.6%.
In 2014, just one in 10 Americans said they don’t spend extra money and they save it it; a similar share say that they “never” have any extra money. The sentiments are in contrast with 2013 and 2008 survey results when the share of savers was at least double. Meanwhile, all the saving and responsible spending appears to have paid off. Those consumers who say they “never” have any extra money has declined since 2008 from 15% to 12% in 2014.
“In 2014, it appears that America has finally stopped holding its collective breath, waiting for the other economic shoe to drop,” said Fiona O’Donnell, category manager, multicultural, lifestyles and leisure at Mintel. “After five years of slow but steady growth, Americans have passed the tipping point of prolonged economic worry and have cautiously accepted that things are better. Confidence in personal finances has allowed consumers to think about the future and look forward rather than linger over the past.”
The Mintel report added that along with a renewed optimism in the economy, Americans also are focused on self-improvement for 2014. Top goals for 2014 include increased family time (88%), healthier diet (88%), exercising more (87%), getting household finances in order (84%), achieving a better work/life balance (82%) and taking care of personal appearance (81%). Perhaps not coincidentally, those who have seen their financial situations improve in the last year are more likely to report having more goals.
These trends are promising for the food and beverage industry, most notably the food service sector. While value is sure to remain a key trend and a driver of foot traffic into restaurants and retail stores, the improved outlook may indicate consumers will visit more often.
This is being seen in the food service category. This past April the National Restaurant Association’s Restaurant Performance Index rose 0.3% compared to March, and is the strongest level it has been since May 2013.
“The recent rise in the R.P.I. was fueled by improvements in same-store sales and customer traffic, which are back on a positive trajectory after the winter soft patch,” said Hudson Riehle, senior vice-president of the Research and Knowledge Group for the N.R.A. “In addition, restaurant operators have an optimistic outlook for business conditions in the months ahead, which is reflected by the expectations component of the R.P.I. rising to its highest level in two years.”
The expectations index of the R.P.I., which measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, stood at 102.2 in April — up 0.2% from March and the strongest level in two years.
All of these trends indicate consumer sentiment and spending may be trending in a positive direction. The challenge for food and beverage companies is to capitalize on the situation in such a competitive market.