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Welcome to the ShopperScape™
Newsletter July 2008
- Expect shoppers’ conservative spending behavior to persist through back-to-school. Spending on apparel and related categories, homegoods and leisure activities and goods will be lackluster as shoppers scrounge to offset higher gasoline and rising food prices.
- Anticipate more shoppers to migrate from traditional formats to discount and value formats in pursuit of good deals.
- Watch for further migration to stores close to home and one-stop shopping venues, such as supercenters, to save on gasoline.
- Expect more online shopping and telecommuting to save fuel.
Seismic Shifts Possible
For the fifth month in a row, more shoppers than last month said they plan to spend much or somewhat less at retail stores compared with a year ago during the next month (Figure 1). But, the increase in the percentage seems to be leveling off—perhaps an early indicator of better—or at least not such dreadful—times ahead.
- For the first time, the majority of shoppers (51%) plan to curb their spending vs. last year, which does not bode well for early back-to-school shopping.
Figure
1
Compared to this time last year, in the next month do you plan to…?
|
February 2008 |
March 2008 |
April 2008 |
May 2008 |
June 2008 |
Spend much/somewhat more at retail stores than you did last year |
14% |
12% |
12% |
12% |
10% |
Spend about the same at retail stores as you did last year |
59% |
48% |
44% |
39% |
39% |
Spend much/somewhat less at retail stores than you did last year |
28% |
40% |
44% |
49% |
52% |
Source: TNS Retail Forward ShopperScape™
The vast majority of shoppers (89%) are taking measures to offset high gasoline prices. Most commonly, shoppers say that they are driving fewer miles overall (Figure 2).
- A significant number of shoppers is spending less on other things (44%) and/or shopping at retailers that offer lower prices or better deals than retailers where they usually shop (26%). Middle Market shoppers are most actively changing their behavior.
- Both tactics—spending less and migrating to lower-priced retailers—are capable of shaking the retail landscape and creating seismic shifts.
Figure
2
What measures, if any, are you and other household members taking to offset high gasoline prices?
|
All Shoppers |
Down Market (Under $22,500) |
Middle Market ($22,500 - $84,999) |
Up Market ($85,000+) |
Driving fewer miles overall |
68% |
64% |
71% |
64% |
Spending less on other things |
44% |
46% |
44% |
41% |
Saving in other ways |
33% |
31% |
33% |
34% |
Shopping at retailers that offer lower prices or better deals than retailers where I usually shop |
26% |
25% |
27% |
23% |
Driving a more fuel-efficient vehicle |
13% |
10% |
13% |
14% |
Not taking any measures to offset high gasoline prices |
11% |
12% |
9% |
14% |
*Bolded/shaded figures indicates significant differences between column percentages.
Source: TNS Retail Forward ShopperScape™
Tactics used to decrease miles driven are changing shopping behaviors. Shoppers who indicated driving fewer miles overall (68% of shoppers) were asked what they were doing to reduce the number of miles they drive. The top three responses (Figure 3)—planning errands to minimize distances, going to stores to do one-stop shopping and going to stores close to home—change shopping patterns.
Some income segments are more likely than others to employ particular tactics, while some behaviors are being adopted regardless of income market:
- Middle and Up Market shoppers are more likely to plan errands to minimize distances, while Down Market shoppers are more likely to do one-stop shopping.
- Across income segments, shoppers are shopping closer to home and doing more activities around the house.
- Up Market shoppers are more likely than other segments to turn to online shopping and telecommuting.
- Down and Middle Market segments are more likely to reduce their visits to friends and family not living close by.
- Middle and Up Market segments are more likely to take vacations nearer to home.
Figure
3
What are you and other household members doing to reduce the number of miles you are driving?*
|
All Shoppers |
Down Market (Under $22,500) |
Middle Market ($22,500 - $84,999) |
Up Market ($85,000+) |
Planning errands to minimize the distance traveled |
75% |
69% |
76% |
76% |
Going to stores where I can do one-stop shopping |
58% |
61% |
58% |
54% |
Going to stores that are closer to home or work |
55% |
53% |
57% |
53% |
Doing more activities around the house instead of driving places |
47% |
46% |
46% |
49% |
Doing more online shopping |
26% |
22% |
26% |
32% |
Visiting friends and family that don’t live close by less often |
23% |
26% |
23% |
19% |
Reducing miles driven during vacations |
17% |
11% |
18% |
21% |
Walking/bicycling to places instead of driving |
15% |
17% |
15% |
16% |
Doing more carpooling |
10% |
10% |
8% |
13% |
Using public transportation |
8% |
9% |
8% |
7% |
Telecommuting to work/working from home more often |
6% |
4% |
5% |
12% |
Other |
4% |
5% |
3% |
3% |
*Bolded/shaded figures indicates significant differences between column percentages.
*Among shoppers driving fewer miles to offset high gasoline prices (Figure 2)
Source: TNS Retail Forward ShopperScape™
Shoppers who are spending less on other things (44% of shoppers) to offset the high price of gasoline are cutting back in numerous areas, but leisure spending is taking the hardest hit. Leading the list of cutbacks are dining out, paid entertainment and vacations (Figure 4). Leisure activities fall fifth on the list.
- Spending also is being reined in for goods across the board: apparel, shoes or accessories, homegoods, consumer electronics, groceries and home improvement products.
- Service spending is being curbed mostly in the area of personal care services.
- Some shoppers are spending less on gifts for others and lowering charitable contributions.
Figure
4
On what types of things are you spending less?*
|
All Shoppers |
Down Market (Under $22,500) |
Middle Market ($22,500 - $84,999) |
Up Market ($85,000+) |
Dining out |
80% |
82% |
81% |
77% |
Paid entertainment (e.g., movies, concerts) |
66% |
61% |
68% |
67% |
Vacations |
59% |
56% |
61% |
56% |
Apparel, shoes or accessories |
59% |
61% |
59% |
55% |
Leisure activities such as hobbies and sports |
50% |
50% |
51% |
45% |
Personal care services (e.g., hair salons, masseuses) |
49% |
47% |
50% |
48% |
Gifts for others |
49% |
52% |
49% |
45% |
Homegoods (e.g., furniture, appliances, décor) |
47% |
50% |
48% |
44% |
Consumer electronics products |
40% |
40% |
42% |
33% |
Groceries |
39% |
46% |
40% |
32% |
Charitable contributions |
38% |
40% |
38% |
35% |
Home improvement products |
34% |
36% |
35% |
31% |
Health and beauty aids |
32% |
40% |
32% |
27% |
Household services (e.g., contractors, housekeeping, home maintenance, lawn care) |
31% |
28% |
33% |
28% |
Memberships (e.g., athletic clubs, country clubs, organizations) |
30% |
29% |
32% |
27% |
Other services (e.g., babysitting, pet sitting, dry cleaning) |
23% |
23% |
25% |
20% |
Other |
4% |
8% |
4% |
2% |
*Bolded/shaded figures indicates significant differences between column percentages.
*Among shoppers spending less to offset high gasoline prices (Figure 2)
Source: TNS Retail Forward ShopperScape™
Changes that shoppers are implementing to save money are affecting where they shop. The one-quarter (26%) of shoppers who reported shopping more at retailers that offer lower prices or better deals vs. retailers where they usually shop to offset high gasoline prices were asked where they were shopping more, less or the same amount. Discount stores/supercenters, dollar stores and warehouse clubs are the main venues where penny-pinchers are migrating to (Figure 5).
- More than half (54%) of shoppers looking to save money by changing where they shop are turning to discount stores/supercenters.
- More than one third (38%) are going to dollar stores more often.
- One-quarter is increasing visits to warehouse clubs.
- Other beneficiaries of “trading down” are off-price specialty retailers, limited-assortment grocers, such as Save-A-Lot and ALDI, and cut-price/warehouse supermarkets, such as Cub Foods.
Figure
5
Change in Shopping Behavior for Low Prices and Better Deals*
|
Shopping more often |
Shopping less often |
Percentage Point Difference (more often – less often) |
Discount stores/supercenters (e.g., Kmart, Meijer, Target, Wal-Mart) |
54% |
12% |
+42 |
Dollar stores or close-out retailers (e.g., Big Lots, Dollar General, Family Dollar) |
38% |
8% |
+30 |
Warehouse clubs (e.g., BJ's Wholesale Club, Costco, SAM'S Club) |
25% |
12% |
+13 |
Value department store retailers (e.g., Kohl's, JCPenney, Sears) |
19% |
22% |
-3 |
Conventional supermarkets (e.g., Albertsons, Kroger, Safeway, etc.) |
18% |
17% |
+1 |
Off-price specialty apparel retailers (e.g., Marshall's, Ross Dress for Less, TJMaxx) |
17% |
11% |
+6 |
Home improvement retailers (e.g., Lowe's, The Home Depot) |
15% |
16% |
-1 |
Small, limited-assortment grocery stores (e.g., Save-A-Lot, Aldi) |
12% |
6% |
+6 |
Drug store retailers |
11% |
13% |
-2 |
Cut-price/warehouse supermarkets (e.g., Cub Food, Food 4 Less, SaveRite) |
8% |
4% |
+4 |
Office supply retailers (e.g., Office Depot, Office Max, Staples) |
8% |
18% |
-20 |
Consumer electronics retailers (e.g., Best Buy, Circuit City, Radio Shack) |
6% |
28% |
-22 |
Specialty food stores/neighborhood specialty markets (e.g., Trader Joe's, The Fresh Market, Fresh & Easy, etc.) |
4% |
19% |
-15 |
Traditional specialty apparel retailers (e.g., Ann Taylor, Gap, Lane Bryant, Old Navy) |
3% |
27% |
-24 |
Home furnishings/furniture retailers (e.g., Bed Bath & Beyond, Crate & Barrel, IKEA) |
3% |
28% |
-25 |
Health/natural foods supermarkets (e.g., Whole Foods, Wild Oats) |
3% |
17% |
-14 |
Traditional department store retailers (e.g., Belk, Dillard's, Macy's) |
3% |
32% |
-29 |
Upscale department store retailers (e.g., Bloomingdale's, Neiman Marcus, Nordstrom, Saks Fifth Avenue) |
2% |
30% |
-28 |
Other |
6% |
4% |
+2 |
Not shopping any retailers more/less often |
16% |
20% |
-4 |
*Among shoppers shopping at retailers that offer lower prices or better deals than retailers where I usually shop (Figure 2)
Source: TNS Retail Forward ShopperScape™
Some retailers’ customer profiles are shifting not just because the retailers are gaining customers who are “trading down,” but they also are losing customers who are turning to even more value-oriented channels. For example:
- Off-price specialty apparel retailers are gaining some customers from upscale department stores and traditional specialty stores but also losing other customers to close-out retailers.
- Value department stores are gaining some customers from upscale and traditional department stores but also losing other customers to discount stores/supercenters.
Some channels are vulnerable to erosion by multiple lines of trade. For example:
- Some drug store customers are migrating to discount stores/supercenters, dollar stores and/or warehouse clubs.
- Some specialty food store customers are migrating to supercenters, warehouse clubs and/or other value-oriented grocers.
Will the Wheels Fall Off the School Bus?
An early review of back-to-school shopping plans portends a potentially lackluster season ahead. June’s survey (vs. July in 2007 and 2006) shows only one-third of shoppers planning to spend on back-to-school (BTS) this year—down 5 percentage points from last year (Figure 6). And, those planning to spend are twice as likely as last year’s shoppers to spend less.
Figure
6
Plans to Spend on Back-to-School Relative to Last Year
|
July
2006 |
July
2007 |
June
2008 |
Total percent of shoppers spending on back-to-school |
39% |
38% |
33% |
|
|
|
|
Much More/Somewhat More |
37% |
32% |
24% |
About the same |
48% |
53% |
47% |
Somewhat Less/Much Less |
13% |
13% |
26% |
This is the first year I will be making back-to-school purchases |
3% |
3% |
3% |
Source: TNS Retail Forward ShopperScape™
The total estimated spending at this point in time is substantially below last year’s levels: an average of a little more than $500 among BTS shoppers (Figure 7). But, it’s early for shoppers to be budgeting for BTS despite retailers’ eagerness to capture what’s left of tax rebates in anticipation of a challenging BTS season.
- Shoppers intend to divide the “smaller BTS pie” about the same way as they did last year with clothing topping the list.
Figure
7
Estimated Spending on Back-to-School and by Category
|
Percentage of total estimated spending July 2007 |
Percentage of total estimated spending June 2008 |
Percentage Point Difference 2008-2007 |
Back-to-School Category |
|
|
|
Clothing |
34% |
36% |
+2 |
Shoes |
12% |
13% |
+1 |
Books |
13% |
12% |
-1 |
Computers |
13% |
12% |
-1 |
School supplies |
11% |
11% |
– |
Backpacks/school bags |
4% |
5% |
+1 |
Dormitory furnishings/bedding/bath |
3% |
3% |
– |
Computer software |
2% |
3% |
+1 |
Other electronics |
4% |
2% |
-2 |
Other electronics |
3% |
2% |
-1 |
|
|
|
|
Total estimated spending (all shoppers) |
$196 |
$167 |
|
Total estimated spending (Back-to-School Shoppers) |
$668 |
$506 |
|
Source: TNS Retail Forward ShopperScape™
Wal-Mart Marketside: Squelching the Misconceptions
Contrary to industry trade speculation, TNS Retail Forward thinks the core focus of Wal-Mart’s small-format Marketside concept will be in providing a value-priced convenience food offer—e.g., meal solutions, grab-and-go, grocery fill-in, quick in-and-out—to the masses. This does not equate to a “premium” food offer targeted to upscale shoppers as suggested by some recent trade publications.
Sandra J. Skrovan
Senior Vice President and Manager of Wal-Mart World™
For more information on Shopper Update reports and the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailforward.com.
SAVE THE DATES! TNS RETAIL FORWARD’S 2008 STRATEGIC OUTLOOK CONFERENCE DATE ANNOUNCEMENT—The 2008 Strategic Outlook Conference series moves to the fall this year. Dates and locations are as follows:
Oct. 14, 2008 Los Angeles at the Hyatt Regency Century Plaza
Oct. 21, 2008 Chicago at the Donald Stephens Convention Center (Rosemont)
Oct. 29, 2008 New York City at the Marriott Marquis
Conference details will be announced as they are available. Watch your Member Alert and Retail News Today™ for updates!
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. |
|
