Welcome to the May 2005 edition of ShopperScape™ Monthly

• Anticipate weaker spending in May after a Mother's Day spending spree.
  
• Look for even Up Market consumers to pull back on their spending as they take a grimmer view of their jobs and investments.
  
• Prepare for even more shoppers to participate in e-commerce, not just online information gathering and browsing.
  
• Look for online growth in the cosmetic and beauty care arena fueled by the combination of demographic tailwinds created by aging boomers and growth in online buying.
  
• Expect a growing proportion of stores' customer bases to have visited sites prior to shopping in the stores—e.g., checking on product availability, printing out coupons.
  
• Expect purchases in the DIY merchandise categories to fall in May.
  

Mother's Day Brightens Spring Shopping

Almost three-quarters of shoppers (72%) were planning to buy Mother's Day gifts this year. The most popular gifts continued to be greeting cards and flowers followed by apparel and candy (Figure 1). Consumers anticipated spending a healthy amount on Mom this year and Mother's Day spending reports indicate that consumers stayed true to their plans.

Jobs and Stocks Discourage Markets

The impact of the recent job market weakness and April's stock market let up is concentrated among Up and Middle Market households, both of which have curbed overall spending plans for May. Interestingly, Down Market households currently are less concerned about job prospects and investments, which are keeping the falloff in near-term spending prospects less pronounced for this income segment (Figure 2).

• In May, the Future Spending Index for Down Market households (incomes less than $22,500) slipped slightly to 102.3 from April's 104.0 reading. More sanguine assessments of job security and incomes were offset by an uptick in consumer debt concerns.
• The index for Up Market households (incomes greater than $75,000) declined from 105.1 in April to 97.5 in May. More somber views of job prospects and incomes compared with the loftier assessments since the holidays, fed the falloff. Debt loads also became more worrisome for this segment, helping offset a pick up in home buying.
• Heightened job and income concerns, along with a falloff in investment worth, pushed the index for Middle Market households (incomes between $22,500 and $75,000) down to 93.9 in May compared with 102.8 in April. Weaker home buying contributed to the decrease.

Online Continues on a Tear

Online shopping continues to grow in popularity for most shopping goods. Granted, the venue hasn't made much progress in the grocery and household essentials convenience goods categories but it's surpassed the catalog venue even in grocery (Figure 3).

• Online shopping has narrowed the gap considerably between the percentages of shoppers buying in stores and the percentages of shoppers buying online in consumer electronics, books and other media (CDs, cassette tapes, DVDs and video tapes).
• Buying clothing, shoes or accessories online is now more than twice as prevalent as buying from catalogs.
• The category that seems to currently exhibit the most runway for online buying is cosmetics and personal care items, third on the list of categories purchased.
  

Wal-Mart Penetrates Cyberspace

Wal-Mart's penetration into cyberspace will fuel online shopping in mass markets. Almost two-thirds of consumers who shop online have at least visited Walmart.com (Figure 4).

• Although the general profile of online shoppers skews Up Market, the Walmart.com shopper is reflective of its core shopper base of Down and Middle Market shoppers.
• All visitors, regardless of income, primarily visit Walmart.com to do one of three things—conduct online product research, look for Wal-Mart advertising flyers and/or locate stores.
• Although product research is equally popular across market segments, checking out promotions is a favorite activity among core Down and Middle Market shoppers.
  

Figure 4. Usage of Wal-Mart Web site
(base = shopped online in past 6 months)

                                    Source: Retail Forward ShopperScape™

DIY Already Done?

Cards for mom, but clothes for younger kids. Because of the Mother's Day holiday, plans to buy greeting cards increased in May. However, when it comes to improving wardrobes, young kids are getting the goods as much as moms are. Home spending focuses on décor items like bedroom textiles rather than DIY projects. (Figure 5)

Already Done It Yourself? Plans to purchase categories used for both outdoor and indoor DIY projects are decreasing in May compared to April. Other categories that are anticipated to be weaker this month include several women's and teen girl's apparel and accessories categories—e.g., women's jeans, women's accessories, teen girl's clothing and women's dress shoes. (Figure 6)

Going Up

Figure 5

Going Down

Figure 6

Global Leaders to Change Food, Drug, Mass Landscape

"A handful of retailers will be at the forefront of remaking the global food, drug and mass retailing landscape in the coming years. But as much as Wal-Mart looms as the Goliath, the companies making the most impact are just as likely to be Carrefour, Metro, Tesco or—increasingly—Aldi and Lidl.

While Wal-Mart is likely to more clearly assert itself as a widespread global player, the forces driving shakeout and change will also come from retailers' push into new formats. Led by the hard discount formats, these tend to be small, convenience formats—an area where Wal-Mart will have to play catch-up. Other forces driving change are growing private label penetration, retailers' evolving marketing efforts and the pursuit of faster growth in developing countries."

Frank Badillo, Vice President, Senior Retail Economist and Manager of the Global Retailing program

For more information on Global Food, Drug, Mass Retailing published May 2005 or the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailfoward.com.

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