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John Spacey, December 23, 2018 updated on April 25, 2023
Consumer discretionary is a category of products and services that are purchased by consumers out of choice as opposed to need. This also includes goods where a purchase can easily be delayed by a consumer if they feel less confident about their financial position. Firms that sell consumer discretionary are particularly exposed to the business cycle as their revenue can fall during a recession and surge during an economic expansion. The following are illustrative examples of consumer discretionary goods.
FashionClothing and related accessories. Clothing is a basic need but people overspend on fashion when the economy is good and cut back during a recession.RetailRetailers that sell any type of consumer discretionary good. This can be contrasted with retailers that sell consumer staples such as food that are relatively unaffected by economic conditions.
EcommerceEcommerce retailers that sell consumer discretionary goods.Luxury GoodsConsumer goods that command a high price due to superior quality or social status.AutomobilesAutomobiles sales are sensitive to the business cycle and interest rates.Anything sold to consumers that lasts a long time such that purchases can be easily deferred. For example, a toaster.
Home ImprovementHome improvement items such as paint or windows.Home FurnishingsFurniture and fixtures such as a couch or a ceiling light.HousewaresHousewares such as pots and pans.Homebuilding & RenovationThe construction of new homes and renovation of existing homes.TravelTravel such as flights, hotels and attractions.Leisure FacilitiesLeisure related facilities such as a ski hill.
Leisure ProductsLeisure related products such as a surfboard.FootwearShoes are essential but people overspend on them in the good times resulting in sales declines in a recession.ElectronicsConsumer electronics such as a mobile phone.Media & PublishingMedia such as movies and publishing such as books.Arts & EntertainmentArts and entertainment such as a museum or theatre.
AdvertisingAdvertising is impacted by a cutback in consumer spending and therefore behaves like a consumer discretionary good.|
| Type | | | Definition (1) | A category of products and services that are purchased by consumers out of choice as opposed to need. | | Definition (2) | Consumer goods that are sensitive to the business cycle and consumer confidence. | | Also Known As | Consumer Cyclical | | Related Concepts | |
Goods
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