Is the post-holiday shopping slump REAL?

January is notoriously a slow month in retail.

The first few weeks of January are always important for stores to move excess inventory – it’s critical in determining whether a holiday quarter was a win or bust. According to CNBC, January 2023 had higher stakes. “January could also set the tone for 2023 — when some economists and retail industry watchers anticipate the U.S. will tip into a recession.”

Despite findings that holiday shopping was more robust than anticipated, CNBC has found “signs that shoppers may be running out of gas. Credit card balances have ticked up. Personal saving rates have fallen. And sales of big-ticket items like jewelry and electronics have weakened.” Reuters also reported, “U.S. consumer confidence unexpectedly fell in January as households continued to worry about the economy's prospects over the next six months.”  Fortune found, “the economy’s primary driver, the American consumer’s willingness to keep spending freely, is starting to crack under the weight of higher prices and interest rates.”

In order to see if the bearish sentiment is justified, we analyzed the aggregated transaction data of 1,000+ DTC brands across Disco Network

At a high level, we noticed a few key insights:

• Parents keep shopping, with Baby brands showing the most resilient post-holiday spending.
• Shoppers spent the most per order in the Fashion & Apparel (Non-Binary/Unisex), Fashion & Apparel (Women’s), and Home & Kitchen categories.
• Sexual Wellness was a category that saw the fastest uptick in spending post-holiday. 

Let’s dive in.

Every category across the Disco Network saw a dip in gross merchandise volume (GMV) coming out of the holiday shopping season, but some categories were less impacted by this seasonality:

In a recent interview with Modern Retail, Michael Wieder, co-founder of Lalo, said, “Baby spending can be ‘recession-proof’ as people look to make practical purchases or have family and friends help out by buying items o registries…No matter what, people want what’s best for their babies.” Unsurprisingly, Michael was right.

Additionally, Health & Wellness continues to see a relatively steady performance at the start of the year. The Forbes Health/OnePoll survey found that the most popular New Year’s resolutions were tied to Health & Wellness - “Improved mental health (45%), improved fitness (39%), lose weight (37%).”

And we can’t say it’s too surprising that Home & Kitchen brands saw a significant dip in GMV, seeing that this is an extremely popular holiday gifting category.

Despite a January slowdown in post-holiday shopping, some categories are expected to recover faster than others, especially Sexual Wellness. In 2022, the Sexual Wellness category saw a 2.25% increase in GMV in February, and we’re predicting a larger jump in 2023. The Sexual Wellness category is already seeing an 11% increase in AOV between January 2023 and February 2023 (month to date). Love is definitely in the air…

What types of purchases did shoppers make in January?

While GMV helps us determine the categories that were the most profitable overall, taking a look at the average order value (AOV) allows us to determine the categories where the largest, individual purchases were taking place. The categories with the highest AOVs in January were Fashion & Apparel (Non-Binary/Unisex), Fashion & Apparel (Women’s), and Home & Kitchen.

Interestingly, one of the categories with the lowest AOV during January is Food & Beverage. In January 2023, the AOV in this category was $59. Shoppers across Disco Network spent -21% less on Food & Beverage in January 2023 as compared to December 2022. 

Dry January is a trend that is increasing in popularity year over year. In 2022 CNN reported, “according to surveys from CGA, a food and drink research firm, 35% of legal-aged US adults skipped alcohol for the entire month — a trend that’s growing in popularity as drinkers look to reset their bodies in the New Year. That’s an increase from the previous high of 21% who completed Dry January in 2019.” This might be a sign that Food & Beverage brands might need to start planning for a steeper drop in GMV in January in the coming years…

With access to 1,000+ DTC brands and over 65 million customer data profiles in the Disco Network, we will continue to share important insights and benchmarking data so that the leaders and operators behind brands can measure their performance against their peers, rather than making decisions in the dark.

If you’re interested in exploring how you can drive collective growth alongside like-minded brands, schedule a demo with Disco to find out more. And if you are curious about how you stack up against the benchmarks, send an email to marketing@disconetwork.com and we'll chat!