Social activities fuel consumer spending in Q1
Social activities, especially travel and dining, topped the list of consumer spending for Q1, during an otherwise difficult quarter. Overall, consumer spending grew by just 1% year-over-year, continuing the trend of total lower growth in spending over each of the last five quarters.
Not surprisingly, many categories saw dips in spending, such as retail – which experienced a decline of 2% year-over-year. The breakout exceptions were around activities that continue to rebound from the isolation of the pandemic.
Where are consumers willing to spend, despite inflationary pressure? What are the pockets of growth? These are the questions we examined as part of the Q1 2023 Cardlyitcs consumer spending report. Cardlytics powers digital advertising for banks and financial partners, and has insight into one of every two credit card swipes in the U.S. We share this Purchase Intelligence of where, when and how consumers are shopping to help marketers identify opportunities to reach people with relevant ads. Here are some of the most compelling findings from consumer spending in Q1 2023.
Travel is still the ticket
No area was harder hit in the pandemic than travel, and no area continues to rebound as strongly. Even as travel expenses have increased – including airfares driven up by fuel prices – there is no decrease in demand. In fact, both spend per consumer and trips per consumer have been increasing since their lows at the outset of the pandemic in Q2 2020 (72% for spend per consumer and 71% for trips per consumer). People continue to want to travel. The biggest gainers are in the areas that were hardest hit – airlines are up 17% and cruise lines are up 94%, both year over year.
Helped by inflation, spending on travel now exceeds pre-COVID levels, up 405% from q2 2020. In spite of inflation, the number of trips also continues to rise, up 319% from Q2 2020.
Restaurants are a mixed bag
Restaurant spending in Q1 was slightly up year-over-year at 5% as a category, and relatively flat from Q4. But the level of service at the restaurant matters. Full-service restaurants showed increases both in spending amount and frequency of visits, outperforming all other forms of food service.
As many restaurants struggled during the pandemic, full-service restaurant spending fell in Q2 2020, dropping to about equal with food delivery and slightly higher than limited-services restaurants, which includes fast food. Since then, spending on full-service restaurants has increased 85% (Q2 2020 to Q1 2023), compared to just 18% for limited-service restaurants over the same time period, bringing full-service restaurant spending now past pre-pandemic levels.
As fatigue from the pandemic and isolation lingers, people are willing to spend more, more often, on the social aspect of eating out among other people.
Easing off the gas pedal
Consumers are becoming less thirsty for gas. Fuel spending is down 9% year over year. In Q1, the spend per customer decreased from Q4 by 4%, likely driven by recent decreases in gas prices. The decline in spending began in Q3 of last year, as gas prices rose and hit recent highs last summer. Now as gas prices move lower,, instead of seeing an increase in the number of transactions per consumer, as you might expect with falling prices, there was a decrease per customer in the number of transactions (-6% transactions per customer from Q3).
Consumers are choosing to fill up less frequently, even as gas prices have fallen slightly over the past few quarters. In fact, the proportion of customers shopping for gas decreased from 68% of all consumers in Q3 2022 to 66% in Q4 to 64% in Q1.
How do we know all this?
We have a “whole wallet” view into consumer purchase behavior, with insights into one out of every two credit card swipes in the U.S. Cardlytics offers a brand-safe, fraud-free advertising platform inside our financial institution partners’ digital channels. That means we can predict future shopping preferences using past purchase behavior. Our insights help brands reach people and positively influence their purchase decisions with relevant ads that reward them with cash back, frictionlessly.