Is discretionary spending back? We looked at Apple Store foot traffic trends as a leading indicator.
As economic uncertainty was felt around the nation last year due to record high inflation rates, foot traffic to non-essential shopping destinations slowed. Consumers then chose to visit discount stores, dollar stores, and other convenient and affordable locations. Leading specialty electronics retailers like Apple Store experienced tumultuous foot traffic trends in 2022 with foot traffic during the year mostly below the levels seen at the end of 2021. Now that 2023 is in full swing, the question is: are consumers returning to Apple Store locations? If so, does this indicate a shift in consumer behavior toward discretionary spending?
To better understand how, and if, consumer trends are shifting this year, we analyzed foot traffic data to leading consumer electronics retailers, including Apple Store, Best Buy, T-Mobile, and Verizon Wireless.
Apple Store & Consumer Electronics
For Apple Store and its three competitors, we analyzed year-over-year foot traffic from Q1 2022 to Q1 2023. Over the last year, Apple Store locations saw an increase of 13% in year-over-year foot traffic. Best Buy saw the largest increase in foot traffic of 24%, while T-Mobile and Verizon Wireless saw increases of 19% and 12%, respectively.
Apple Store and Best Buy both followed similar trends over the last year while T-Mobile and Verizon Wireless followed similar trends of their own. This could be because Apple Store and Best Buy are both specialty electronics retailers that offer a wide variety of consumer technology products, while T-Mobile and Verizon Wireless are both wireless network providers that focus on selling cellular service and phones. It’s possible that T-Mobile and Verizon Wireless experienced similar foot traffic patterns due to various factors, such as new cell phone releases, seasonal promotions, or other reasons. In contrast, Apple Store and Best Buy, with their wider range of products including laptops, smartwatches, and headphones, may be catering to a broader range of consumer needs, leading to their own distinct foot traffic trends.
In Q3 of last year, Apple Store and Best Buy saw a dramatic spike in foot traffic, with a sharp decline into Q4. This decline may be due to consumers focusing their spending on essentials and affordable luxuries during the holiday season rather than purchasing expensive electronic products. With the economic pressures consumers have been grappling with lately and added holiday expenses that typically arise during the last quarter of each year, perhaps consumers were looking to save by spending on lower-cost goods during this time. After this dip, however, consumer foot traffic to all four chains rebounded in Q1 2023 and may continue to rise.
The recent resurgence in visits to consumer electronics stores in Q1 2023 indicates a potential shift in consumer behavior toward increased discretionary spending. This possible shift is noteworthy as discretionary spending has not been a trend seen for some time due to concerns about the economy and personal financial situations among many Americans. It will be interesting to see if this trend continues into the rest of 2023.
What’s Next for Apple?
Apple Store locations have just expanded to India for the first time, suggesting significant company growth and retail success. As Apple Store customers continue visiting its stores around the globe, the company is likely to continue its growth efforts in the states, further building customer loyalty as it evolves. For example, Apple’s partnership with Target has allowed for store-within-a-store concepts to emerge, providing Apple Store experiences to Target customers. Creative expansion ideas like this may not only build loyalty in Apple Store customers, but may also expose others to the Apple brand, attracting new customers.
Apple has seen remarkable growth in sales over the last few years, likely driven by various factors, including the pandemic-induced surge in consumer demand for at-home entertainment options. As one of the largest electronics companies on the planet and with such accelerated growth, Apple and its Apple Store locations may continue expanding and attracting more visitors this year than in 2022.
Consumer Electronics in 2023
If current Apple and Best Buy foot traffic trends continue, coupled with the potential shift in consumer behavior toward discretionary spending, it’s possible that foot traffic to consumer electronics stores could continue to rise, resulting in increased purchases of electronics. However, it’s worth noting that about one third of all consumer electronics sales are completed online, meaning that retail locations may need to innovate in order to attract online shoppers and drive in-store traffic.
To maintain and further build customer loyalty, Apple Store and its competitors in the consumer electronics market will likely continue providing unique experiences, promotions, or new products throughout the year.
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