Consumer spending on the rise

Product Management

Consumers are opening their wallets and spending more at retail establishments, a sign that should make many merchants cautiously optimistic. According to the Commerce Department's recently released March spending report, shoppers spent 0.2 percent more during the month after a substantial 0.7 percent rise in February.

The increase was unexpected, with many economists predicting flat spending for the month. While there were a variety of factors that affected expenditures, such as cool weather that increased utility costs, pricing strategies did seem to have an effect.

"The data on spending showed that consumer prices rose just 1.0 percent over the last 12 months, the smallest gain in nearly 3-1/2 years and down from a 1.3 percent rise in February," Reuters reports, citing the Commerce Department report. "The deceleration extended to core prices, which were up 1.1 percent from a year ago after advancing 1.3 percent the prior month. The March increase was the smallest in two years and well below the Federal Reserve's 2 percent target."

Although the economy is still sluggish in its growth overall, this latest report suggests that consumers are willing to spend money.

Consumers are opening their wallets and spending more at retail establishments, a sign that should make many merchants cautiously optimistic.

However, retailers may need to meet them halfway by offering lower prices, discounts on multiple purchases, unique merchandising or other ways for them to cut costs on their own.

Operating a successful retail business in the current economic climate requires merchants to really know their customer and understand how to sell to them. Of course, pricing can play a pivotal role in either encouraging customers to make an unplanned purchase or discouraging them from buying at all. ECommerce software can help retailers gain insights from customer data and trends to help better position goods to their target audience.

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