If you cannot read this ShopperScape(tm) Newsletter for February 2005, go to http://www.retailforward.com/shopperscape/shopperscape0205.htm

Welcome to the ShopperScape™ Newsletter February 2005

• Anticipate cheaper hearts to prevail among more valentines this year than last.
  
• Forgive some of the cheapness due to warm-hearted spending on tsunami victims in January, leaving some shoppers a little short.
  
• After the strong rebound in shopping sentiment in January, expect a slower pace of spending this month as the Down Market tries to catch up with holiday bills and as the Middle and Up Markets feel the effects of softer investment gains.
  
• Take heart. Plenty of gift cards are still burning holes in shoppers' pockets.
  
• Don't be surprised if your special valentine presents you with a card and a home movie.
  
• Winter will end…sometime.
  

Cold Hearts Dampen Valentine's Day Spending?

The latest ShopperScape™ results indicate that Valentine's Day gift giving isn't going out of style, though they do suggest that fewer goodies will be changing hands on Feb. 14 this year.

• Although the vast majority—about two-thirds (68%)—of shoppers plan to spend the same amount this year as last on their valentines, almost one-quarter (24%) plan to spend less and very few (7%) plan to spend more. Down Market shoppers are most likely to have plans to pare their spending on Valentine's Day gifts this year.
• The biggest gift categories for Valentine's Day continue to be the traditional ones—greeting cards, candy and, for romantics, flowers. Up Market shoppers are most likely to plan on buying these three categories compared with the other markets, though they don't plan to spend any more in dollar terms.
• Where the differences in spending power among the Markets show up is in the less-frequently planned categories like jewelry, lingerie/sleepwear and other apparel, consumer electronics and sporting goods. For the relatively small numbers planning to buy in these categories, Up Market shoppers clearly plan to outspend the other market segments.
  

January spending for some shoppers was tempered by aid efforts following the tsunami that struck Asia the day after Christmas.

• Although two-thirds (68%) of all shoppers indicated no cut backs on spending due to charitable contributions made to aid organizations, the remaining third cut back on spending from a little bit to a lot.
• Among those who did trim their spending to help tsunami victims, a slim majority cut spending only a little bit. Still, 15% of shoppers cut back either some or a lot, which likely dampened spending last month, especially for non-essential purchases.
  

Shopper Sentiment Downshifts as Stocks and Homes Weigh on Markets

After bounding to its highest level in six months in January, Retail Forward's Future Spending Index downshifted in February, indicating a moderation in consumer spending is in store this month. The index declined to 100.9 from 104.9 in January.

Weaker assessments of investment performance and home buying activity across the key market segments are reducing consumers' willingness to spend this month, despite buoyant optimism about jobs and incomes. While a falloff in spending plans occurred across all three market segments, the weakness was most pronounced among Down Market households.

• After posting increases in each of the past two months, the Future Spending Index for Down Market households (incomes less than $22,500) fell from 105.5 in January to 98.5 in February, pointing to a slower pace of spending among these households this month. Heightened concerns about debt loads accumulated over the holidays helped produce that falloff.
• Middle Market households (incomes between $22,500 and $75,000) saw their index edge lower to 102.7 from 104.2 in January. The negative wealth impact of softer investment gains combined with a decline in home buying among these households more than offset a steady job outlook and easier debt burdens compared with last year.
• The 99.8 February index reading for Up Market households (incomes greater than $75,000) marks a slowdown from the 105.5 showing in January. The main driver of that slowdown was a sizeable drop in recent investment performance, which plays a prominent roll in determining the desire to spend among more affluent households. A further decline in refinancing activity contributed to the falloff in near-term spending plans.
  

The Running of the Bridezilla Experience

At 7:30 a.m. on that cold February day in Columbus, Ohio, the line of brides and their entourages extended well beyond the Filene's Basement storefront. Though the store wouldn't open till 8 a.m., some had already been waiting for hours. The more-prepared shoppers had sleeping bags, lawn chairs and thermoses of coffee. Others reviewed Filene's "Tips for Success" handout or browsed flyers passed out by other retailers, such as Bed Bath & Beyond, in hopes of later cashing in on lucrative bridal registry business.

Shortly before 8, several Filene's employees took their places amid the racks of gowns while others led the crowd in a countdown to the opening: 10 … 9 … 8 … 7 … 6 …. By five, shoppers were off and running, toward the front of the line, toward the entrance and toward those employees steadying—or, in some cases, clinging to—the rolling metal racks of gowns.

Within minutes, the racks were empty. The shoppers apparently had studied Filene's tip sheet: "Grab any dress and try to trade it for another." And although the retailer expanded the dressing area for the occasion, clusters of women staked out spots throughout store, a mission control of sorts. Meanwhile, mothers, sisters, bridesmaids and the occasional father—many sporting matching clothes for easy identification amid the horde of shoppers—scurried back and forth in search of the perfect gown. Very few, if any, opted to follow Filene's third tip: "Go have a cup of coffee and come back in an hour or even at lunchtime. Most of the dresses will be back on the racks, and the scene will be calmer."

The fact that most shoppers stayed attests to the excellent job Filene's has done to build up the excitement surrounding the experience, which is more akin to Basic Bridal Training 101 than a sales event. Indeed, shoppers could pick up an "I survived the Filene's Basement Bridal Event" T-shirt.

Missed the Columbus "Running of the Brides"? Filene's Basements in the following cities also are hosting bridal events: Chicago (Feb. 11), Boston (Feb. 18), New York-Union Square (March 4) and Pittsburgh (March 11).

Purchasing Plans for February Mostly Flat

Celebrating Valentine's Day with a card and a movie? Of no surprise, greeting cards are on the rise for February along with movies to ease the winter doldrums. An anticipated upswing in home office supplies suggest that it's time to get back to business for the parents. The kids enjoy a better shot of getting a few more toys and games this coming month than they did last month when the toy binge from December took its toll on January toy purchases.

No significant dips in category plans. Although no big boom in spending is anticipated for February, on a positive note, no big bust in spending is on the horizon. Only two categories show any decline in the percent of shoppers planning to buy them between January and February—vitamins and nutritional supplements and computer software—and those drops are minimal.

Going Up

Going Down

C-stores Can Ill Afford to Remain Complacent while the Competition Eats Its Lunch

"The competitive landscape is changing. Consumer shopping and eating behavior is changing. During the next five years, the convenience store sector will undergo a transformation. Progressive c-store operators will try to develop a winning convenience concept, one capable of delivering a quick, consistent and quality in-store experience relevant to shopper needs. Industry players will work hard in the coming years to transform the box from a fuel and fill-in stop to one that is top of mind for immediate consumption and convenience-oriented service needs."

Sandy Skrovan, Vice President and Manager of Food/Drug/Mass

For more information on Industry Outlook: Convenience Stores or the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailfoward.com.

700 Ackerman Road Suite 600
Columbus, Ohio 43202
Voice: 614 355 4000
Fax: 614 355 4059
http://www.retailforward.com

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