To view this email as a web page, click here. Welcome to the ShopperScape™ Newsletter June 2007 PREDICTIONS Look for improvement in home improvement centers as Lowe’s and The Home Depot build traffic with big promotions for Father’s Day. Anticipate department stores to continue to chip away at apparel specialty store share in the adult apparel sector. Recognize that affluent shoppers—while big apparel spenders—aren’t typically on the hunt for designer labels and look for good bargains just like the rest of us. Don’t expect shoppers to spend on Dad for Father’s Day with quite the same gusto as they did with Mom for Mother’s Day. However, stock up on plenty of greeting cards and shirts and ties. HOT OFF THE PRESS Shoppers Return to HIC this Month TNS Retail Forward's May ShopperScape™ survey findings show that department stores continue to be shopped by more consumers than apparel specialty stores, but the big month-to-month change in figures occurred in home improvement center/hardware store shopping (Figure 1): With a year-to-year increase of 11 percentage points, department store retailers once again captured the largest increase in shopper visits across all lines of trade. Home improvement centers/hardware store promotional campaigns to generate traffic hit the mark: Shopper visits increased 6 percentage points from a year-ago May Lowe’s and The Home Depot accounted for the increase. Discount department stores/supercenters added to their already large past four week shopper base, registering a 4 percentage point increase from a year ago. Consumer electronics retailers also enjoyed a 4 percentage point increase in shoppers visiting the channel. In contrast, home textiles/home furnishings stores only about held their own with a 1 percentage point increase in shoppers. With only a 1 percentage point increase in past four week shoppers, adult apparel specialty stores continue to lose this season’s battle for apparel dollars to department stores. Figure 1 Percentage of Primary Shoppers Shopping Line of Trade in the Past Four Weeks                     All Primary Shoppers                  May, 2006 May, 2007 Y-T-Y Percentage Point Difference Department Stores 49% 60% +11 Home Improvement Centers/Hardware Stores 54% 60% +6 Discount Stores/Supercenters 81% 85% +4 Consumer Electronic Stores 30% 34% +4 Home Textiles/Home Furnishings Stores 28% 29% +1 Adult Apparel Specialty Stores 48% 49% +1         As of January 2007, past four week shoppers are defined by shoppers selecting retailers from lists that organize retailers by channel. Previously, shoppers initially selected retailers they shopped during the past six months. Shoppers’ responses to this past six month question defined the list of retailers from which they selected the retailers they shopped during the past four weeks. ShopperScape™ data are balanced to key demographics, which from January 2007 include race and ethnicity Source:  TNS Retail Forward ShopperScape™. SHOPPER INSIGHTS Affluent Shoppers: Most Don't Dress Like Paris or Lindsay Neither Paris nor Lindsay need to worry about being displaced in the fashion pages while spending time out of the limelight—at least not by typical affluent shoppers. The majority of affluent shoppers, defined by ShopperScape™ as primary shoppers with annual household incomes of $175,000 or more aren’t fashionistas and generally don’t buy luxury or high-end designer duds (Figure 2). Fifty-eight percent of affluent shoppers reported that not one of their past 10 apparel and accessory purchases were luxury or high-end designer brands. Only one out of five (21%) classified half or more of their past 10 purchases as luxury or high-end designer apparel or accessories. Figure 2 Of the last 10 apparel and accessory purchases you made for your personal use, how many would you classify as luxury or high-end designer brands?   Affluent Primary Shoppers ($175k+) None 58% One - four 21% Five - 10 21% Source:  TNS Retail Forward ShopperScape™ Although not typically willing to pay the price for luxury apparel items, female affluent shoppers outspend average female shoppers by a significant amount (Figure 3). Affluent female shoppers are almost two-and-a-half times more likely to spend $200 or more on casual apparel within a three-month period. Figure 3 Spending by Female Shoppers on Casual Wear during the Past Three Months   All Female Primary Shoppers Affluent Female Primary Shoppers ($175k+) Index $0 15% 6% 41 $1 to $24 5% 1% 22 $25 to $49 9% 7% 78 $50 to $99 18% 6% 33 $100 to $149 17% 10% 61 $150 to $199 8% 5% 56 $200+ 27% 65% 237 Source:  TNS Retail Forward ShopperScape™ Affluent female shoppers are more likely to buy their casual apparel at department stores and adult apparel specialty stores (Figure 4). Relatively few (12%) buy their casual apparel at discount department stores or supercenters. Figure 4 Where Spent Most on Casual Wear All Female Primary Shoppers Affluent Female Primary Shoppers ($175k+) Index Adult Apparel Specialty Stores 23% 33% 141 Department Stores 32% 41% 130 Discount Stores/Supercenters 31% 12% 38 Other Retailers Not Listed 14% 14% 100 Source:  TNS Retail Forward ShopperScape™. Both affluent female shoppers and the general female shopper population are most motivated to spend on casual apparel by sales and better prices and good prices for the quality, though a smaller share of affluent female shoppers cite price as a motivator for store choice (Figure 5). Affluent female shoppers are more likely than the general female shopper population to spend the most at stores that carry their preferred styles and brands. Figure 5 Why Spent Most Where on Casual Clothes All Female Primary Shoppers Affluent Female Primary Shoppers ($175k+) Index Has my preferred brands 10% 16% 165 Has my preferred styles 28% 41% 146 Better able to shop many categories 11% 15% 136 Good prices for the quality 53% 51% 96 Has sizes I need 33% 29% 88 Item on sale or better everyday prices 62% 54% 88 Convenience to home/work/other stores I shop 26% 21% 83 Other (please specify) 8% 13% 164 No particular reason-bought on impulse 4% 3% 80 Source:  TNS Retail Forward ShopperScape™ Father's Day Intentions Similar to Last Year Half of primary household shoppers plan to spend the same on Father's Day as they did last year; that's up from 47% of shoppers who in 2006 said their spending plans were unchanged from the prior year. About one-third won't spend anything on Father's Day this year, similar to the percentage of non-spenders last year (Figure 6). Up Market shoppers are the most likely to purchase gifts for Father’s Day (78%), and their spending is more likely to increase than decrease. Down Market shoppers are least likely to spend on Father’s Day gifts (56%). Figure 6 Compared with last year, do you plan to spend more, the same, or less this year on gifts for Father's Day?   All Primary Shoppers 2006 All Primary Shoppers 2007 Down Market (Less than $22,500) Middle Market ($22,500 to $84,999) Up Market ($85,000+) Much More 2% 2% 2% 2% 3% Somewhat More 7% 6% 5% 7% 7% About the same 47% 50% 41% 49% 60% Somewhat Less 6% 4% 4% 4% 5% Much Less 4% 3% 4% 3% 3% Do not plan to spend anything for Father's Day this year 34% 34% 44% 35% 22% Source: TNS Retail Forward ShopperScape™ Most dads will be satisfied with a greeting card again this year. About one-third will receive some type of apparel. About one out of eight will get some kind of consumer electronics gift. A sizable percentage (37%) will be given an “other” present (Figure 7). Roughly the same percentages of shoppers plan to buy in the listed categories as did last year. Greeting cards are the exception: The share of shoppers planning to purchase the category increased 5 percentage points from last year. Except for greeting cards, the average amount shoppers are planning to spend in each category declined from last year. The declines are most likely to affect apparel and consumer electronics spending. Retailers such as Wal-Mart and dollar stores need to keep candy aisles well-stocked; this category is strongest among Down Market shoppers. Given shoppers’ purchasing and spending plans, most categories besides greeting cards and candy will fare better with Middle Market shoppers and best with Up Market shoppers. Sporting goods’ spending plans are about the same for Middle and Up Market shoppers.     All Primary Shoppers Down Market (Less than $22,500) Middle Market ($22,500 to $84,999) Up Market ($85,000+)     Percentage Planning to Purchase Y-T-Y Difference in Percentage Planning to Purchase Average Amount Planning to Spend* Y-T-Y Dollar Difference Percentage Planning to Purchase Average Amount Planning to Spend* Percentage Planning to Purchase Average Amount Planning to Spend* Percentage Planning to Purchase Average Amount Planning to Spend* Greeting Cards   73% +5 $7 $0 65% $5 72% $9 81% $6 Clothing/Shoes   30% +3 $46 -$22 25% $29 30% $41 31% $61 Consumer Electronics   13% +1 $100 -$32 13% $43 11% $99 16% $119 Fragrances/Cologne   12% 0 $36 -$2 13% $22 13% $35 11% $45 Sporting Goods   11% +1 $71 -$6 10% $30 10% $78 13% $76 Candy   9% +2 $9 -$4 14% $10 9% $8 7% $9 Jewelry   4% 0 $82 -$52 5% $37 4% $78 4% $110 Flowers   3% 0 $20 -$7 6% $12 2% $18 2% $31 Other (not including spending on services like dining out, movies, hotels, vacations, etc.)    37% +2 $50 -$27 30% $35 34% $53 46% $92 Base = Shoppers planning to spend on Father's Day gifts. *Average dollar amount among shoppers planning to purchase the category Source: TNS Retail Forward ShopperScape™ Compared with Mom, Dad is getting the short shrift on spending. Among those planning to buy Father’s Day gifts, they will spend an average $82, about $7 less than the average amount for Mother’s Day (See the May 2007 newsletter and Figure 8). The biggest disparity is among Down Market shoppers. They planned to spend an average of $81 on Mom compared with just $59 on Dad. Figure 8 Overall, what is the total amount you plan to spend for Father's Day this year? (Compared with Mother's Day)   All Primary Shoppers 2007 Down Market (Less than $22,500) Middle Market ($22,500 to $84,999) Up Market ($85,000+) Average amount Father's Day $82 $59 $74 $115 Average amount Mother's Day (May 2007) $89 $81 $78 $117 Base = Shoppers planning to spend on Father's Day gifts. Source: TNS Retail Forward ShopperScape™ POINT OF VIEW Wal-Mart World™-Health and Beauty Care Shopping "Wal-Mart dominates the U.S. health and beauty care (HBC) market. It has an edge vs. other food/drug/mass channels due to its vast geographic coverage, convenient locations, one-stop shopping appeal and everyday low prices on national brands. Wal-Mart's HBC offer disproportionately attracts low-to-middle income, less-educated shoppers in big households. The retailer is improving its HBC offer - e.g., adding natural/organic products and upgrading the overall look of the department with better signage and shelf displays - in an effort to capture a bigger share of the HBC wallet from other shopper segments." Katia Watson, Consultant, TNS Retail Forward For more information on Retail Perspectives and the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailforward.com. What's TNS Retail Forward ShopperScape™? TNS Retail Forward ShopperScape™ focuses on today's consumers and their shopping behaviors. TNS 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. TNS 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/retailintel/ss_default.asp.

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