Explained
Consumer staples vs consumer discretionary
Consumer staples are what people buy whatever the economy does: food, drink, toiletries. Discretionary is what they can put off: cars, clothes, travel.
| Consumer staples | Consumer discretionary | |
|---|---|---|
| What it covers | Food, beverages, tobacco, household and personal products, food retail | Autos, apparel, luxury, restaurants, hotels, leisure, most retail |
| Demand in a downturn | Holds up; people still buy toothpaste | Falls; a new car can wait |
| Often described as | Defensive | Cyclical |
| Typical brands | Soft drinks, snacks, shampoo, detergent | Trainers, handbags, coffee shops, TVs |
| Classification | GICS sector 30 | GICS sector 25 |
What is the difference between consumer staples and consumer discretionary?
Whether the purchase can wait. The two sectors come from GICS, the Global Industry Classification Standard that MSCI and S&P Dow Jones Indices maintain, which sorts every listed company into one sector. Staples are needs, discretionary are wants, and the line is drawn by what a household keeps buying when money is tight.
The edges are odd. Beauty and personal care is a staple under GICS, so a lipstick company sits next to a toothpaste maker. Amazon is discretionary while a supermarket chain is a staple.
Why investors group them this way
Because the two tend to behave differently through an economic cycle. Staples companies' sales usually move less when the economy slows, which is what defensive means in this context. Discretionary companies' sales usually move more in both directions, which is what cyclical means. These are descriptions of past patterns across many companies, not a statement about any one of them.
Where brand data fits in each
Staples brands are bought on habit, so the public conversation about them is steady and a change in it stands out. Discretionary brands live on desire and launches, so their mentions spike and fade. Either way, the brand is the thing people talk about; the ticker is a level above.
This site's sectors, sorted into the two
Our sectors are our own grouping by what the brands sell, not GICS. Retail, household and media hold companies from both sides, so they are left out of this split.
Consumer staples
Consumer discretionary
Consumer staples vs Consumer discretionary: common questions
- Is beauty consumer staples or discretionary?
- Under GICS, personal care and beauty products are consumer staples. Some classification systems and analysts treat prestige beauty as discretionary.
- Is a restaurant chain consumer staples?
- No. Restaurants are consumer discretionary under GICS, along with hotels and leisure.
- Is Walmart consumer staples?
- Yes. Under GICS, large food and general merchandise retailers that sell mainly staples are classed as consumer staples.
Related
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