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Welcome to the ShopperScape™ Newsletter March 2010

NOT YET TIME TO PARTY HARDY

Shoppers’ spending sentiment is becoming less pessimistic over time but retailers should hold off on passing out too many party favors (Figure 1).  The overall trend shows that shoppers are shifting away from spending reductions.  However, plans to increase spending at retail remain flat.

Figure 1

Figure 1. Intentions to Spend More, the Same or Less at Retail Stores in the Coming Month Compared with This Time Last Year (3-month moving average)

Source: Retail Forward ShopperScape™, February 2008 to February 2010

The big holdup on the party hats and horns continues to be the falloff in the percentage of shoppers feeling more positive about their household income levels (Figure 2).  For nearly a year the percentage of shoppers feeling worse off has exceeded the percentage feeling better off about their household incomes.  

• Job security has improved by 2 percentage points year-to-year but shoppers who are insecure about their jobs continue to outnumber those feeling more secure.
• Shoppers are less likely to be in the doldrums about the worth of their investments and housing values than they were last year at this time.  But the percentages of shoppers feeling worse off—especially about the value of their homes—still exceed those feeling better off.
• Debt is the only financial health measure where the percentages of shoppers feeling better off outnumber those feeling worse off.  Perceptions about credit card debt and monthly mortgage and car payments have remained the same year-to-year.

Figure 2

Shoppers' Perceived Household Financial Health Compared with Last Year

Note: Bolding/highlighting indicates a significant year-to-year difference (95% confidence level)

Source: Retail Forward ShopperScape™, February 2009 and February 2010

EMERGING FROM RECESSION

Depending on the point in the recession—and evidently the time of year—between two-thirds and three-quarters of shoppers reported changing their shopping behavior due to the economic downturn (Figure 3). As shoppers begin to emerge from the recession, one-quarter report their shopping behavior changed significantly during the downturn. Most shoppers who have changed their behaviors in significant ways are likely to sustain these habits.

Figure 3

How Much Downturn in Economy Changed Shopping Behavior

Source: Retail Forward ShopperScape™, August 2008, May and October 2009 and February 2010

During the recession shoppers embraced three types of tactics—limiting, deal-seeking and trading down—to control spending.  Limiting behaviors such as buying only things truly needed, cutting back on luxury items and making fewer purchases have been among the most common tactics utilized (Figure 4).

• About one-third of shoppers shopped less often, which is reflected in the declining number of stores visited observed in ShopperScape™ findings.
• Postponing purchases, buying things only needed near-term and keeping things longer before replacing them were less common practices.

The majority of shoppers adopting limiting behaviors plan to “stick with” them.  But shoppers who have adopted limiting behaviors are less likely to continue using them post-recession than shoppers utilizing other money-saving tactics such as deal-seeking and trading down.  The biggest drop-off is in postponing purchases.  Pent-up demand will be fulfilled. 

The big question is whether a large percentage of shoppers (37%) will continue to buy only things they truly need.  Will consumers adopt simpler lifestyles or will they return to the crass materialism spawned by the Madonna era and played out by too many Kardashian children for beleaguered Bruce Jenner to handle?  Of course, the definition of things “truly needed” continues to change.  In a recent ShopperScape™ survey computers and mobile phones were found to be among things considered necessities.  So the new “simple life” will include remaining connected via laptop and mobile phone.

Figure 4

Participated in Limiting Behaviors during Recession and Plan to Continue
(base = all shoppers)

Source: Retail Forward ShopperScape™, August 2008 and May and October 2009 and February 2010

Deal-seeking behaviors such as taking advantage of good sales, using coupons and comparison shopping were popular money-savers prior to the recession.  Overabundant inventories during the early part of the recession fueled sales shopping and the fortunes of off-price retailers at the expense of high-end retailers.  Technology has made coupons more accessible and comparison shopping easier.  These tactics will persist post-recession although good sales will be harder to find.

Figure 5

Participated in Deal-Seeking Behaviors during Recession and Plan to Continue
(base = all shoppers)

Source: Retail Forward ShopperScape™, August 2008 and May and October 2009 and February 2010

Trading down in product or brand choice can be risky but many shoppers have been willing take a chance on store brands, especially for small-ticket consumables.  It does not appear that shoppers who made the switch to store brands are highly motivated to reconnect with national or high-end brands.  Store brands are here to stay. 

About the same percentage of shoppers who reported trading down in product or brand choice in October planned to continue those behaviors in February. In contrast, fewer shoppers plan to continue doing more shopping at discount stores or value retailers than were shopping them in October, which could signal a return to previous shopping haunts.  Learning a new store—especially a new grocery venue and especially stores with a “high hassle” factor—takes more effort than many shoppers are willing to make to save $50 per month.

Figure 6

Participated in Trading Down Behaviors during Recession and Plan to Continue
(base = all shoppers)

Source: Retail Forward ShopperScape™, August 2008 and May and October 2009 and February 2010

ShopperScape™ members will receive a more detailed analysis of current shopping trends and spending plans for the holiday. ShopperScape™ members also can request assistance in custom analyses of this information by contacting Rachel McGuire (Rachel.mcguire@kantarretail.com) or Mandy Putnam (mandy.putnam@kantarretail.com).

For more information about RFIS reports and ShopperScape™, please contact Katherine R. Clarke at katherine.clarke@kantarretail.com or 614-355-4009.

Two Easton Oval, Suite 500
Columbus, Ohio 43219
Voice: 614 355 4000
Fax: 614 355 4059
http://www.retailforward.com


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