Executive Briefing
Economic & Consumer Insights for Marketing Executives
BIGresearch’s Consumer Intentions & Actions Survey monitors over 8,000 consumers each month
providing unique insights & identifying opportunities in a fragmented and transitory marketplace
October 2009 (Respondents surveyed 9/30 – 10/07/09)
Talking Points:
§ Confidence remains flat in October at 30%
§ Half remain practical in purchasing
§ Consumers hoping for layoffs to cool off in next 6 months
§ Cotton or cashmere? Shifting shopping strategies
§ Walmart, Kohl’s top Women’s/Men’s Apparel
§ Consumer Migration: Children’s Clothing
§ Walmart or Toys R Us for Children’s Toys?
§ 90 Day Outlook: Trick or Treat?
§ What’s Hot? Google.com v. Bing.com
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Economy
Step into the WABAC machine and recall one year ago…the financial markets, consumers, et al were reeling from the mid-September downfalls of Lehman Brothers, Merrill Lynch, and AIG. In early October 2008, BIGresearch asked 8,000+ consumers how confident they were in the strength of the U.S. economy…19.0% replied they were confident/very confident, down nearly 58% from the 2007’s 44.8%.
So now that the stage has been set, how is consumer sentiment shaping up this month? With unemployment drawing closer to 10% and consumers still skeptical about economic recovery rumblings, fewer than a third (30.4%) feels confident/very confident in chances for a strong economy, relatively flat with last month (29.8%) and not a very merry sign for retailers headed into a critical holiday season.
One can glean good news from this month’s report…in October, about one in five (22.4%) continues to worry about political and national security issues, up less than a point from September (21.6%), and down a full 27% from a year ago (30.8%).
But as Holiday ’09 quickly approaches (or arrives for some early-bird retailers), consumers are still indicating they are adhering to a conservative spending mantra…nearly half (48.8%) say they’ve become more practical/realistic in their spending, down a point from September (49.7%) and only three points from 51.7% in October ’08 (the first post-banking crisis reading).
While little Johnny might have a Blu-ray on his wish list, it appears that Santa will be bringing blue jeans instead…with less than three shopping months left, the majority of consumers (56.0%) are focused on needs over wants when spending, unchanged from September (56.1%) and declining two points from a year ago (57.8%). Back in a less tumultuous October ’07, fewer than half (47.1%) spent in this mindset.
Personal/Financial
With the 9.8% unemployment rate looming overhead, consumers are more hopeful that layoffs will cool off over the next 6 months…in October, 34.6% anticipate “more” pink slips, down just over a point from September (36.1%) and almost 30 points from October ’08 (63.5%). Just under half (47.0%) feel that layoffs will remain the same, up from last month (45.3%) as well as last year (29.6%), while nearly one in five (18.5%) are forecasting a decline, on par with 30 days ago (18.6%) and increasing from a year ago (6.9%).
With improving optimism for the overall employment market in October, it appears that consumers are relaxing concerns about their personal job security…4.7% worry about becoming laid off, down three points from last month (7.8%) and last year (7.5%), and mirroring sentiment recorded in October ’07 (4.6%).
During Q4 of 2009, consumers plan to stay focused on debt reduction and – not the news retailers want to hear – controlling spending…in October, one in three (34.7%) plans to pay down debt over the next three months, flat with September (34.5%) and lowering just over a point from a year ago (36.2%). Nearly as many (33.7%) have plans to decrease overall spending, rising two points from last month (31.5%), but trailing the ’08 reading (38.1%). And, supporting the practicality persona of this year’s holiday shopper, one in four (25.3%) plans to pay with cash more often (i.e. swiping the credit less often), up from 22.6% last month. Intent to increase savings (26.6%) has also risen from a month ago (25.4%), so it appears that consumers are working on their 2010 resolutions a little early.
With the DJIA eyeing the 10K mark, the early October market dip doesn’t seemed to have deterred bullish investors…this month, the majority of investors (52.1%) indicate they would definitely/probably invest in the stock market, rising from 48.0% in September. Additionally, one in ten (10.2%) plans to buy stocks over the next quarter, rising from 9.0% a month ago…5.1% of investors plan to sell, a slight uptick from September (4.7%).
National average pump prices are down a $1 from a year ago (source: AAA), but seven in ten consumers are still adjusting their spending to accommodate their fuel budgets…these smart shoppers continue to buy store brands/generics (30.8%), shop for sales more often (37.9%), and clip coupons (34.1%).
Though with the holidays on the way, let’s take a look at specific shoppers for a popular gifting category – Women’s Clothing. We’ve diced our data to peek at how these apparel shoppers of department stores (Macy’s, JC Penney, Kohl’s, etc.), discounters (Walmart, Target, etc.), and specialty shops (Old Navy, Lane Bryant, Express, Ann Taylor, etc.) differ in their shopping strategies due to prices at the pump. Department store and discounter shoppers continue to price compare with ad circulars as well as clip coupons, while specialty shoppers are honing their online price comparing and purchasing skills:
Retail
Will it be cotton or cashmere this year? The deciding factor may be the bargains to be had by practical consumers…headed into Holiday ’09, one in four (25.8%) says they only buy clothing on sale, rising 5 points from a year ago (20.4%), when confidence dropped and practicality spiked following the mid-September bank busts. One in ten (11.0%) maintains clothing sales aren’t important (v. 15.3% in ’08), while the majority (63.2%) still “usually” buys on sale.
EDLP = the formula for success for Women’s Clothing shoppers within Walmart…the big discounter continues to lead this category with 12.8% shopping there most often, rising 1+ points from a year ago (11.4%). Kohl’s continues in second place with 10.1% (also rising from 8.6% in ’08), while JC Penney (7.5%), Macy’s (6.6%), and Target (2.9%) round out the Top 5.
The same line-up is seeing success in Men’s Clothing as well: Walmart (16.1%), Kohl’s (9.9%), and JC Penney (8.9%) lead, with all three retailers gaining ground from a year ago. Macy’s (5.5%), Target (3.0%), and Sears (3.0%) follow.
With twice the share of its nearest competitor, Walmart (14.6%) is a proven winner in Children’s Clothing…Kohl’s (6.0%), Target (5.6%), JC Penney (4.4%), and Macy’s (2.4%) complete the Top 5. No surprise here…price (49.8%) most often drives kid’s clothing purchase decisions, followed by selection (33.8%), quality (26.8%), location (24.1%), and availability of sizes (20.1%).
According to this month’s Consumer Migration Index (CMI), two big discounters are positioning themselves for long-term Children’s Clothing gains…the CMI, which tracks those who have immigrated to a store (new customers in the past year) against those who have emigrated (left within the past year), and where a positive rating spells net growth to a retailer, shows that Walmart and Target are gaining new customers with +1.4 and +1.0 ratings, respectively, while JC Penney and Kmart are experiencing customer deficits:
What’s accounting for the surge of consumers from certain stores? 12.6% of fleeing customers cite high prices, while poor selection (5.7%), decline of store appearance (4.1%), poor quality (3.9%), competitor ads (3.4%), and long checkout or dressing room lines (3.4%) were also key culprits.
For the third consecutive month, Walmart remains on track in Shoes…with 12.2% shopping there most often, the big discounter bests discount specialty Payless (10.2%). Kohl’s (5.2%), JC Penney (3.0%), Target (2.4%), and DSW (2.4%) follow.
Toys R Us has launched a “Christmas in July” offensive and Walmart is touting 100 hot toys for under $10…so who will win the big toy battle this holiday season? In October, 21.4% contend they shop Walmart most often for Children’s Toys, rising from 18.7% a year ago, while 15.0% shop second place Toys R Us (declining from 17.7% a year ago). Target (6.4%), Kmart (1.1%), and Amazon (0.6%) follow.
And for “big kid” gifts like HDTVs, netbooks, and other Electronics, expect consumers to head to big box Best Buy and Walmart, where 32.1% and 18.9%, respectively shop most often in October (both rising from ’08)…Target (3.2%), Amazon (2.5%), and Sears (2.0%) follow.
With Halloween candy, Thanksgiving turkey, and holiday ham purchases on the horizon, look for many shoppers to beeline to Walmart, where 16.7% shop most often for Groceries. Traditional grocers Kroger (6.2%), Publix (3.4%), and Safeway (2.9%) follow, while Meijer and Shoprite (tied, with 2.0% each) round out the Top 5.
Walmart maintains a definitive stronghold in Health & Beauty Care…more than one in four (28.5%) shops the discount giant most often for soaps, shampoos, and shaving supplies, more than double that of closest competitors Walgreens (8.7%) and CVS (8.3%). Target (6.2%) and Rite Aid (3.0%) follow.
However, when it comes to filling prescriptions, it’s the druggists who most often aid consumers…Walgreens (15.4%) and CVS (13.3%) continue to lead this category in October. Walmart is a strong third place contender with 11.0% shopping there most often…Rite Aid (5.3%) and Target (2.4%) complete the Top 5.
Future Purchases
Depending on how you interpret the October 90 Day Outlook, results could be a trick or a treat…according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who’ll spend more), ALL categories have improved from September as well as October 2008 (read: this is the treat). Here’s the trick: recall the terrible sentiment from consumers in post-banking crisis October ’08…it didn’t take much to improve on those figures. Compare the Diffusion Index to a more stable October ’07, and you’ll find that all categories have declined:
Retail Merchandise Categories – 90 Day Outlook
(Oct-09 compared to Sep-09, Oct-08, and Oct-07)
Are high-dollar gifts in peril for Holiday ‘09? There’s good news and bad news to report this month with pricey durables. The good: compared to a month ago, purchase intentions have improved for several popular gift categories, including computers, jewelry, TVs, and digital cameras. The bad? Compared to a year ago (again, post-bank fall-out), these categories have remained flat (computers, digital camera) or declined (jewelry, TVs).
What’s Hot…Not
What’s Hot? We’re talking tech, TV, and fashion this month…Google (with 74.5% rating it “hot”) bests Bing (39.5%) in the battle of search engines. And, while FlashForward is highly rated among consumers overall, Community has found a niche with young men and young women enjoy The Vampire Diaries. That same female 18-34 demographic declares plaid clothing and over-the-knee boots as on-trend this season. What’s Not? While one in four (27.9%) admits to loving Snuggies, this figure-obliterating, Gumby-like fleece sack is particularly out of favor with men…wonder why?
Sincerely,
Editor
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