To view this email as a web page, click here.

Welcome to the ShopperScape™ Newsletter August 2008

• Anticipate a bumpy ride as shoppers cut back on back-to-school spending.
• Look for discount stores/supercenters and dollar stores to fare better than average for back to school at the expense of conventional and big box retailers.
• Don’t breathe a sigh of relief yet, but take heart that shoppers are slightly more optimistic about future spending than they were last month.
• Understand that shoppers are employing a variety of tactics to save money.  Although many are attracted to sales/deals and pantry-stocking, many more are shopping less often and more frugally.  Trading down is becoming etched in shoppers’ vocabularies.
• Don’t expect shoppers to spend what’s left of their tax rebate checks on frills or thrills.  Most of them already used them for everyday bills.

Bumpy Bus Ride

The ride back to school will be bumpy this year, but shoppers are slightly more optimistic about back-to-school (BTS) shopping this month than they were last month.  This month shows 6% fewer shoppers planning to spend the same as last year and 6% more shoppers planning to spend less than last year vs. July 2007 (Figure 1).

• Almost four in 10 shoppers (39%) plan to participate in back-to-school shopping—6% more shoppers than last month and virtually the same percentage that participated in BTS last year. 

Figure 1

Plans to Spend on Back-to-School 2008 vs. 2007 and 2006

Source: TNS Retail Forward ShopperScape™

Some of this year’s shoppers are starting back-to-school shopping later than last year and shoppers’ spending plans are more conservative this year.  By the third week in July, only 15% of shoppers had done any BTS shopping and those who had shopped only spent an average of $339 vs. $365 in 2007.  Overall, one-quarter of planned spending was completed by that time vs. 28% for the comparable time period in 2007 (Figure 2).

• Thirty-six percent of shoppers plan to spend on BTS during the remainder of the season and estimate their future spending to be $438 on average vs. $458 in 2007.
• In total, shoppers who are buying BTS plan to spend an average $534 this year vs. $578 in 2007—an 8% decline.

Figure 2

Back-to-School Estimated Spending 2008 vs. 2007 and 2006

Source: TNS Retail Forward ShopperScape™

Virtually no change in the distribution of BTS funds among various categories of goods is anticipated from last year (Figure 3).

• Clothing remains at the top of the BTS spending list—estimated to account for about one-third (34%) of total BTS spending.
• Other major categories include computers, books, shoes and school supplies.

Figure 3

Estimated Spending by Back-to-School Category

Source: TNS Retail Forward ShopperScape™

Shoppers are planning to save on BTS by doing more shopping at discount department stores and supercenters and less shopping at traditional department stores, apparel specialty retailers and big box specialists (Figure 4).

• Dollar stores also will benefit from frugal parents.
• Off-price apparel and value department stores will fare better than their traditional apparel counterparts.

Figure 4

Percentage of Back-to-School Shoppers Planning to do More, Same or Less Back-to-School Shopping at
Retail Channels This Year Compared with Last Year

Source: TNS Retail Forward ShopperScape™, July 2008

Shoppers Seek Savings

For five months in a row, the percentage of shoppers stating they plan to spend less during the next month vs. the same time last year grew.  In July, this percentage moved in a more positive—or at least less negative—direction.  Significantly fewer shoppers (45%) vs. June (52%) plan to spend less and significantly more shoppers (14%) vs. June (10%) plan to spend more (Figure 5).

Figure 5

Compared to this time last year, in the next month do you plan to…?

Bolded/shaded numbers indicate significant difference vs. all shoppers in July 2008

Source: TNS Retail Forward ShopperScape™

Shoppers planning to spend less (45% of shoppers) are using a variety of tactics to curb their appetites—most commonly buying fewer things (69%) and shopping less often (66%) (Figure 6).

• More than half of shoppers are exploiting good sales and deals.  Up Market shoppers—having the resources available to take advantage of sales—are most likely to use this money-saving tactic.
• Alternatively, many shoppers (45%) are only buying what they need near term in an effort to save.
• Coupon usage is common (41%).
• Postponing purchases (38%) goes hand-in-hand with shopping less often.

Various forms of trading down are occurring, which could affect the composition of the retail landscape long term:

• Doing more shopping at discount and value retailers (35%)
• Buying less expensive versions of products (30%)
• Buying more store brands instead of national or high-end brands (30%)
• Trading down to less expensive brands (21%)

Less common are pantry-stocking tactics:

• Buying in bulk (20%)
• Stocking up on items expected to rise in price (13%)

Figure 6

In what ways are you reducing spending at retail stores this year compared with last year?*

*Among the 45% of shoppers who are spending somewhat less/much less compared with last year.
Bolded/shaded numbers indicate significant difference vs. all shoppers

Source: TNS Retail Forward ShopperScape™

Making Ends Meet with Rebate Checks

The majority of shoppers used their rebate checks to make ends meet—either paying credit card or other bills (26%) or using them for everyday expenses (25%) (Figure 7).

• Taking into account the differences between percentages of shoppers who had already received rebate checks in May vs. July, shoppers were more likely to use their rebate checks for everyday expenses as time passed.   Of shoppers who had used their rebate checks by the time of the surveys, 27% of July survey’s shoppers had used them for everyday expenses vs. 22% of May survey’s shoppers.
• This suggests that shoppers are focused on fulfilling immediate needs.

Figure 7

The government has started to distribute tax rebates. If you received a rebate, how did you use the money?

* Note responses are not mutually exclusive

Source: TNS Retail Forward ShopperScape™

Among shoppers still expecting to receive rebate checks or not yet spending their rebate checks, the largest percentage (38%) don’t know how they will spend it and may be setting it aside for a “rainy day” (Figure 8).

• May’s recipients were more likely to use their rebate checks to catch up on credit cards or other bills.

Figure 8

If you have not received your rebate yet or if you have not used the money from your rebate,
how will you use the money?*

*Among shoppers expecting to receive a rebate

Source: TNS Retail Forward ShopperScape™

American ShopperScape™ 2008

Shoppers have shifted their shopping patterns to accommodate rising gasoline and food prices.  Trading down in terms of what they buy and where they spend, shoppers are interacting differently with the retail landscape.  Shoppers seek one-stop shopping venues and stores closer to home to save money and time.  Discount and value retailers benefit in this economy at the expense of traditional and high-end retailers.  Leisure and entertainment spending—especially outside the home—suffers cutbacks.

A result of recent shopper migration is a change in retailers’ customer bases.  Some retailers are losing patrons at the lower end of the income spectrum, some are gaining customers at the higher end of the income spectrum, and some are losing and gaining customers on both ends of the income spectrum.  Whether their new patrons permanently adopt these retailers partly depends on how well retailers address the needs of their new customers.  It also depends on how well new patrons acclimate to shopping in less-familiar territory.  Shoppers are testing various money-saving tactics and will ultimately adopt the methods that help them meet their goals with the least amount of effort and highest rewards.

For more information on ShopperScape™ 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!

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

To subscribe to the Monthly ShopperScape Newsletter™ or other TNS Retail Forward newsletters, click here

If you would like to stop receiving the ShopperScape™ Monthly newsletter, please edit your content preferences here.