Consumer discretionary actions are the choices that consumers make when they have enough income to spend on non-essential goods and services. These actions reflect the preferences, tastes, and lifestyles of consumers, as well as their confidence in the economy. Consumer discretionary actions can have a significant impact on various industries and sectors that produce or sell consumer discretionary products.
In this blog post, we will explore some of the top consumer discretionary actions that consumers are taking in 2023, based on market trends, consumer surveys, and industry reports. We will also discuss the implications of these actions for investors, businesses, and policymakers.
1. Shopping Online
One of the most popular consumer discretionary actions is shopping online. Online shopping has been growing steadily for years, but it accelerated during the Covid-19 pandemic, as consumers shifted to e-commerce platforms for convenience, safety, and variety. According to a report by eMarketer, global e-commerce sales reached $4.9 trillion in 2023, up 21.5% from 2022.
Online shopping is not only limited to physical goods, but also includes digital products and services, such as streaming media, online gaming, e-books, and online education. Consumers are also using online platforms to compare prices, read reviews, and access discounts and coupons. Some of the leading online retailers include Amazon.com Inc. (AMZN), Alibaba Group Holding Ltd. (BABA), and Walmart Inc. (WMT).
Online shopping offers several benefits for consumers, such as convenience, choice, and savings. However, it also poses some challenges, such as cybersecurity risks, delivery delays, and environmental impacts. Online shopping also affects the traditional retail sector, which faces lower foot traffic, higher competition, and lower margins.
2. Buying Electric Vehicles
Another consumer discretionary action that is gaining momentum is buying electric vehicles (EVs). EVs are vehicles that run on electricity instead of gasoline or diesel. They offer several advantages over conventional vehicles, such as lower emissions, lower fuel costs, and higher performance. EVs also benefit from government incentives, such as tax credits, subsidies, and regulations.
According to a report by BloombergNEF, global EV sales reached 8.6 million units in 2023, up 43% from 2022. The report also projected that EVs will account for 31% of global passenger vehicle sales by 2030. Some of the leading EV manufacturers include Tesla Inc. (TSLA), Volkswagen AG (VWAGY), and BYD Co. Ltd. (BYDDF).
Buying EVs is a consumer discretionary action that reflects the growing environmental awareness and social responsibility of consumers. However, it also involves some challenges, such as high upfront costs, limited charging infrastructure, and battery degradation. Buying EVs also affects the traditional automotive sector, which faces lower demand for gasoline-powered vehicles and higher investment needs for EV development.
3. Traveling Domestically
A third consumer discretionary action that is recovering from the pandemic is traveling domestically. Domestic travel refers to traveling within one’s own country or region for leisure or business purposes. It includes various modes of transportation, such as air travel, rail travel, road travel,
and cruise travel.
According to a report by Statista Research Department , global domestic tourism expenditure reached $3 trillion in 2023 , up 18% from 2022 . The report also estimated that domestic tourism accounted for 75% of global tourism expenditure in 2023 . Some of the leading domestic travel destinations include China , the United States , and India .
Traveling domestically is a consumer discretionary action that reflects the pent-up demand and desire for travel among consumers after the pandemic . However , it also involves some risks , such as Covid-19 variants , travel restrictions , and health protocols . Traveling domestically also affects the international travel sector , which faces lower demand , higher competition , and lower revenues .
4 . Eating Out
A fourth consumer discretionary action that is rebounding from the pandemic is eating out . Eating out refers to consuming food or beverages at restaurants , cafes , bars , or other food service establishments . It includes various types of cuisine , such as fast food , casual dining , fine dining , and ethnic food .
According to a report by Technavio , global food service market size reached $3 .4 trillion in 2023 , up 15 % from 2022 . The report also forecasted that the market will grow at a compound annual growth rate ( CAGR ) of 4 .5 % from 2023 to 2027 . Some of the leading food service companies include McDonald’s Corp . ( MCD ) , Starbucks Corp . ( SBUX ) , and Yum ! Brands Inc . ( YUM ) .
Eating out is a consumer discretionary action that reflects the social and emotional needs of consumers after the pandemic . However , it also involves some challenges , such as hygiene standards , price sensitivity , and dietary preferences . Eating out also affects the grocery sector , which faces lower demand , higher competition , and lower margins .
5 . Investing in Luxury Goods
A fifth consumer discretionary action that is thriving in 2023 is investing in luxury goods . Luxury goods are products or services that have high quality , exclusivity , and prestige . They include various categories , such as fashion , jewelry , watches , cosmetics , and art .
According to a report by Bain & Company , global luxury goods market value reached $380 billion in 2023 , up 20 % from 2022 . The report also predicted that the market will grow at a CAGR of 10 % from 2023 to 2025 . Some of the leading luxury goods companies include LVMH Moet Hennessy Louis Vuitton SE ( LVMHF ) , Hermes International SA ( HESAY ) , and Kering SA ( PPRUY ) .
Investing in luxury goods is a consumer discretionary action that reflects the wealth creation and aspiration of consumers in 2023 . However , it also involves some risks , such as counterfeiting , taxation , and sustainability . Investing in luxury goods also affects the mass market sector , which faces lower demand , higher competition , and lower differentiation .