May 9 (Reuters) - Online retail sales in the U.S. rose

about 7% from January to April this year, an Adobe Analytics

report showed on Thursday, driven by strong demand for groceries

and cheaper discretionary items.

WHY IT'S IMPORTANT

Consumer discretionary spending has been in focus over the

past several months, as sticky inflation has forced shoppers in

various categories to trade down to more affordable products.

According to Adobe's data, the share of the cheapest units

sold in categories like grocery and personal care has increased

during the first four months of the year, while the share of the

most expensive products has come down, indicating consumers are

looking for cheaper alternatives.

For instance, the share of least expensive groceries has gone

up to 48% in April 2024 from 36% seen in January 2019.

CONTEXT

Big retailers, including Walmart ( WMT ) and Target ( TGT )

have laid out conservative forecasts for the year, as shoppers

navigate an uncertain macroeconomic environment.

Walmart ( WMT ) and Target ( TGT ) have also launched affordable private

label food brands priced below $5 and $10 respectively.

KEY QUOTE

"We are seeing consumers down-shift and spend more on the

cheapest goods within a degree, that is helping categories stay

resilient and see continued spending, but it also showcases that

consumers are having to manage the inflation they're

experiencing in housing, gas and food," said Vivek Pandya, Lead

Insights Analyst for Adobe.

BY THE NUMBERS

Total online spending in the period from January to April

2024 grew to $331.6 billion, compared to $309.8 billion in the

same period last year. Grocery spending saw highest growth of

15.7%, according to the report.

Adobe expects the first half of 2024 to rake in over $500

billion in online spending, representing a 6.8% year-over-year

growth.

The report relies on direct-to-consumer transactions based

on over 1 trillion visits to U.S. retail websites.