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Welcome to the ShopperScape™ Newsletter November 2005
Despite the
recent slowdown in the growth of housing values in some areas, most
consumers don't yet feel the effects on their households. For the
minority of consumers feeling the effects of slowing growth in housing
value concern over the value of their house is most likely to keep
them up at night (Figure 1).
Figure 1
Retail Forward's Future Spending Index registered an improvement this month following October's falloff, a sign that consumers plan to increase the spending pace in the first month of the holiday shopping season. The index rose to 96.8 from 94.0 last month (Figure 2). "This month's results indicate that the harsh hurricane season is quickly becoming a distant memory for those not directly affected," said Steve Spiwak, an economist with Retail Forward. "The short-lived hurricane impact is most evident in a bounce back in optimism about job prospects, the key driver of spending. The moderation in gasoline prices from post-hurricane peaks also is boosting spirits as the holidays approach." Indeed, ShopperScape™ results show that far fewer shoppers say they will curb holiday spending as a result of the storms compared with last month. This bodes well for discretionary services and products, such as entertainment outside the home and consumer electronics, which were most vulnerable to last month's storm-induced dip in spending plans. Still, shoppers
also said they plan to spend at a softer pace than last holiday,
which is in line with Retail Forward's forecast for a modestly weaker
holiday shopping season. Additionally, most shoppers reported that
finding the best bargains on gifts will be a primary goal, which
should produce a highly promotional holiday season.
The Future Spending indexes for the Up, Middle and Down Market segments all rose this month following declines for each of these income cohorts last month.
Figure 2 Retail
Forward Future Spending Index™
Source: Retail Forward ShopperScape™. The Retail Forward Future Spending Index combines households' current assessments of key drivers of spending across income segments, including the job situation, incomes, investments, debt levels, home buying, and seasonal factors to produce a forward-looking indicator of spending for the coming month.
Pull Back on Holiday Spending Intentions
Figure 3 Which of
the Following Categories Best Describes How Much You Think You
Will Spend on Holiday Gifts This Year Compared To Last Year?
Figure 4 Indicate
how strongly you "Agree" or "Disagree" with
each of the
Majority of shoppers report Hurricane Katrina and Hurricane Rita will not have an effect on holiday spending. The latest survey suggests that the initial shock of Hurricanes Katrina and Rita on shoppers' moods is quickly giving way to more optimism as it becomes clearer that the storms likely won't have a large impact on jobs and incomes outside of affected areas—and thus ability to spend—during the holidays.
Figure 5 Thinking
ahead to the December holidays, how will
Figure 6 Which
of the following categories, if any, do you expect to reduce
In examining purchase intensions by category, November looks like it will be a more upbeat shopping month than September. As shoppers begin to prepare for the holiday season, many will be getting a jumpstart on their holiday shopping by purchasing popular holiday gifts. Retailers can expect an increase from last month in spending on toys/dolls/games, fine jewelry and pre-recorded video tapes or DVDs. Clothing will also be more popular this month than last as shoppers look to outfit themselves for the holidays or purchase clothing for gifts. Specifically, men's underwear, undershirts and socks, men's jeans, women's casual shoes (not athletic), boy's clothing and teen girl's clothing will see increases. Year-to-year differences however are generally flat to down with pre-recorded video tapes or DVDs recording the biggest slide (Figure 7). Figure 7. Going Up
As winter approaches,
fertilizer or grass seed and lawn care tools are on few purchasers'
lists this month. Very few other categories are expected to record
a notable decline from last month. Hair care products and vitamins/nutritional
supplements register the greatest year-to-year declines in purchase
intent (Figure 8). Figure 8. Going Down
The votes are in. Monthly Target shoppers are a little bluer than Spot would lead us to believe. By a nose, monthly Target shoppers are more likely to be Democrats while monthly Wal-Mart shoppers are more likely to be Republicans.
Figure 9 Political Party Affiliations of Shoppers
Wal-Mart World™ Shopper Update "Want to reach American shoppers? Go to Wal-Mart! The retailing giant attracts two-thirds of U.S. shoppers on a monthly basis. And the retailer is gaining traction with more shoppers. While the highest penetration is still in the down- and mid-market segments, three-quarters of high-income households shopped at a Wal-Mart store in the past six months. And half of them shop there monthly! But they shop there selectively—typically for low-priced food and other consumables. As Wal-Mart tries to become more relevant to a broader swath of shoppers it must also take care not to alienate its core target market."
For more information
on the Wal-Mart World™ Shopper Update, November 2005
or the Retail Forward Intelligence System™ call
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Don't
expect press about lack of housing value growth in some pockets
of the country to affect consumers' housing-related plans unless
a downturn knocks on their own front doors.
Slow
Housing Value Growth Not Yet Affecting Most "Home Sweet Homes"
Future
Spending Index Shows Encouraging Holiday Trends
Broad-based
Improvement in Spending Plans
Overall,
shoppers are planning to spend less this year compared to last year.
Last year's strong holiday performance—the best since 1999—will
be tough to repeat. In fact, most shoppers are planning to spend
about the same or less on gifts this year compared to last holiday.
Any lingering effects of the recent natural disasters and higher
fuel prices likely are two reasons why the pace of spending could
come in weaker than in 2004. 
Low
prices on holiday gifts are a priority for all shoppers this holiday
season. ShopperScape™ results indicate that the majority
of shoppers are most likely to be concerned about finding the lowest
prices for holiday gifts this year than they were last year (Figure
4). 
Hurricane
Effects Subsiding
Discretionary
purchases to benefit.
As the impact of this year's hurricanes fades, fewer shoppers are
planning to reduce their spending in key categories (Figure 6).
Going
Up: Gifts for the Holidays
Going
Down: Time to Put the Lawn to Rest
Votes
Are In: Monthly Target Shoppers vs. Monthly Wal-Mart Shoppers
