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Welcome to the ShopperScape™ Newsletter April 2006 PREDICTIONS Look forward to a much better April than March in most retail sectors, propelled by consumers who are upbeat about their job security across all markets. Watch for shoppers, especially Up Market shoppers, to hit the pavement in search for new spring apparel in the coming weeks. Count on Up Market shoppers to check out new fashions but expect the average apparel shopper not to enjoy the process as much and to be looking for replacement items. Expect casual to continue to reign over dress apparel. Watch for consumers to be tending to their current lawns instead of planting sod in new lawns, which will dampen lawn care spending overall. Expect the Easter bunny to deliver the goods in about the same proportions as last year. Exceptions will include less travel by the Down Market due to the resurgence in gasoline prices. However, it looks as if those who are staying home this Easter will spend a little more on their Easter outfits. HOT OFF THE PRESS Sprucing Up Oneself Taking Priority over Landscaping Comparisons between 2005 and 2006 spending plans reveal that shoppers are more likely this year to focus on updating their closets rather than their backyards. Additionally, shoppers' spending plans indicate more polarization in spending plans than previously. This year fewer shoppers plan to maintain the status quo when it comes to spending on their personal wardrobes (Figure 1). This year's apparel shoppers are more polarized in several ways: Up Market shoppers are the only segment with shoppers planning to spend more outnumbering those planning to spend less than last year on their wardrobes. This bodes well for Up Market apparel retailers such as upscale departments stores and better apparel specialty stores. In contrast, the Down Market's spending plans for updating their spring wardrobes are more conservative than last year. The Middle Market is more polarized than last year with larger percentages planning to spend more but also larger percentages planning to spend less. The end result is likely to be a wash. Figure 1 Source: Retail Forward ShopperScape™. Plans for landscape spending are more conservative than last year across all income segments, which is reflective of the shift toward consumers tending to their current spaces rather than trading spaces (Figure 2). Only in the Up Market do larger numbers of consumers plan to spend more on their landscaping this year than last overall. However, year-to-year comparisons between 2005 and 2006 planned landscape spending show that even in the Up Market spending is likely to be less robust than last year. Middle Market landscape spending plans also indicate that landscape spending is likely to fall short of last year among these consumers. Landscape spending plans among Down Market consumers have fallen significantly from last year. Year-to-year comparisons show that eleven percent of Down Market shoppers are planning to spend less this year than last. Figure 2 Source: Retail Forward ShopperScape™. APRIL CONSUMER OUTLOOK Shoppers' Spirits Set for Spring Everybody's More Optimistic In April, the Future Spending Index for April increased for each of the key income segments compared with the prior month. The index for Middle Market households (incomes between $22,500 and $75,000) registered a healthy 104.4 in April, up from 98.8 in March. A significant improvement in assessments of jobs and incomes compared with last year drove the increase. The positive wealth impact from better investment performance and a pick up in home buying contributed (Figure 3). Job growth and stronger home buying also buoyed the Down Market segment (incomes less than $22,500). The index for this cohort climbed 116.2 compared with 110.0 a month ago. Extra cash freed up from stronger refinancing activity also played a roll. The index for Up Market households (incomes greater than $75,000) clocked in at 107.6, up six points from March. The recent stock market run-up and a brighter employment outlook are boosting the spending moods of more affluent households. Figure 3 Retail Forward Future Spending Index™ (December 2003 = 100) 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. SHOPPER INSIGHTS Casual Still King (and Queen) Most shoppers still wear somewhat casual or very casual clothes to work. Although ShopperScape™ data indicate that this trend has not changed significantly overall from last year, some segments are becoming more casual than others. More Down Market shoppers who are employed 32+ hours a week are shifting towards very casual clothes such as jeans and a casual top for a typical workday. Half of all female Down Market Shoppers wear very casual clothes to work (an eight percentage point increase compared to 2005) while 56% of male Down Market Shoppers favor the same casual attire (a twelve percentage point increase compared to 2005) (Figures 4 and 5). Male Middle Market shoppers saw the largest increase in the percentage wearing somewhat casual clothes to work. Nearly half (46%) of this cohort now reports wearing somewhat casual clothes to work, up from 34% last year. Up Market shoppers continue to wear somewhat casual clothes for a typical workday. Female Up Market shoppers have shifted even more to somewhat casual clothes, with 44% favoring clothes such as slacks or skirts without a jacket/blazer. This compares to 39% wearing the same type of clothing in 2005. Nearly one-third (32%) of all male Up Market Shoppers wear very casual clothes on a typical workday, up from 23% in 2005. Figure 4 Type of Clothing Worn by Females for a Typical Workday* *Among female respondents employed 32+ hours a week. Source: Retail Forward ShopperScape™.   Figure 5 Type of Clothing Worn by Males for a Typical Workday* *Among female respondents employed 32+ hours a week. Source: Retail Forward ShopperScape™.   Apparel Shopping Attitudes ShopperScape™ data indicates that only 39% of all shoppers enjoy shopping for clothing. Therefore, it comes as no surprise that nearly half (45%) of all shoppers only shop for clothing when they need to replace an item. Likely due to extra spending money, Up Market Shoppers are most likely to enjoy shopping for clothing. On the other hand, Down Market Shoppers are the least likely to enjoy shopping for new clothes (Figure 6). It is most important to Up Market Shoppers to wear fashionable clothing, while less than one-quarter (22%) of Down Market Shoppers agree. Exactly one-quarter (25%) of Middle Market Shoppers agree that it is important to them to wear fashionable clothing. Due to tighter budgets, Down Market Shoppers are the most likely to shop for clothing only when they need to replace an item. The majority of all shoppers preferred the clothing styles that were available last year. Only 14% of all shoppers like the clothing styles available now more than they liked the styles offered last year. Figure 6 Attitudes about Apparel Shopping (% strongly agree/agree) Source: Retail Forward ShopperScape™   Easter Bunny Plans Not Hollow The majority of shoppers don't plan to vary their Easter holiday spending much from last year's pace, which should put a hop in retailers' steps in April. With the holiday occurring later than usual, year-to-year comparisons will be difficult to make. The largest reduction in spending plans is associated with Easter vacation travel plans in the Down Market. Rising gasoline prices likely are putting a damper on the Down Market (Figure 7). The Down Market is also the most likely segment to be cutting back on entertainment away from home to celebrate Easter. Most shoppers expect their Easter dining out plans to mirror last year's plans. Apparel spending for Easter appears as if it will be at least as robust as last year.   Figure 7 Planned Easter Holiday Spending on Category Compared to Last Year Source: Retail Forward ShopperScape™, March 2006. PURCHASING PLANS Going Up Although it looks as if consumers will be spending more money this month on their lawns and small household projects to spruce up the spring nest, year-to-year comparisons suggest that they won't be spending quite as much this year as last. Women will be sprucing up their spring wardrobes with casual attire and accessories. (Figure 8) Figure 8 Categories Shoppers Plan to Purchase in the Next Four Weeks Source: Retail Forward ShopperScape™. Going Down The good news is that not many categories show declines in the percentages of shoppers intending to purchase them in April 2006 versus March 2006. Consumers must be feeling a little healthier this month with fewer planning to purchase drugs than last month and also compared with last year. Other categories showing signs of potential decline include men's accessories, craft/hobby supplies, greeting cards, auto supplies and women's athleticwear. (Figure 9) Figure 9 Categories Shoppers Plan to Purchase in the Next Four Weeks Source: Retail Forward ShopperScape™. POINT OF VIEW Wal-Mart World™: Perspectives on Plano Prototype "The new prototype stores in Plano, Texas introduces a number of format, merchandising and product initiatives that represent a dramatic departure from what typically is found in a Wal-Mart Supercenter. In some areas, including health and beauty and grocery, the changes will likely shift shoppers' perceptions and behaviors in Wal-Mart's favor. In other departments, including apparel and home, changes are largely superficial and will benefit from further development. However, from front to back, inside and out, the retailer is moving toward a next generation supercenter that surely will capture plenty of attention and quite possibly a larger share of shopper wallet." Julie Campitelli, Consultant with Retail Forward For more information on Wal-Mart World™: Perspectives on Plano Prototype, April 2006 or the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailforward.com. What's Retail Forward ShopperScape™? Retail Forward ShopperScape™ focuses on today's consumers and their shopping behaviors. Retail Forward ShopperScape™ has been fielded since November 2003 to a sample of 4,000 consumers each month. The survey gathers timely, up-to-date information about where consumers shop and what they buy. Retail Forward ShopperScape™ is administered through TNS/NFO's online household panel, weighted based to be representative of U.S. households. For more information, call Kathy Clarke at 614-355-4009 or visit http://www.retailforward.com and select ShopperScape™ under Product & Services in the navigation bar located at the top of the home page to view sample reports and learn more about how to access ShopperScape™ information. 700 Ackerman Road Suite 600 Columbus, Ohio 43202 Voice: 614 355 4000 Fax: 614 355 4059 http://www.retailforward.com To subscribe to the Monthly ShopperScape Newsletter™ or other Retail Forward newsletters, click here. If you would like to stop receiving the ShopperScape™ Monthly newsletter, please edit your content preferences here.