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Welcome to the ShopperScape™
Newsletter August 2009
| SLIGHT UPTICK IN SPENDING INTENTIONS |
 Shoppers are slightly more positive about their near-term spending plans vs. last month (Figure 1).
- The percentage of shoppers who plan to spend more in the coming month slightly increased to 9% from 8% and the percentage of shoppers who plan to spend less declined to 47% from 50%.
Figure 1
Intentions to Spend More, the Same or Less at Retail Stores
in the Coming Month Compared to this Time Last Year
Source: Retail Forward ShopperScape™, July 2008 to July 2009
Perceptions about households’ financial health are a mixed bag (Figure 2).
- Percentages of shoppers perceiving job security and income level gains continue to slip.
- Views about debt levels have remained about the same since the beginning of the year with shoppers feeling they are better off than last year slightly outnumbering those who feel they are worse off.
- With the pickup in the stock market, fewer shoppers are pessimistic about the state of their investments.
- Shoppers also are a little more positive about their home values than they have been in recent months.
The greatest changes in perceptions of household financial health since January are related to rising pessimism about household incomes but more optimism about investments.
- Shoppers’ evaluations of their household income levels have grown increasingly pessimistic—only 23% report being better off in terms of household income levels vs. 30% in January.
- The second-largest change since the beginning of the year is the declining percentage of shoppers who feel worse off about their investments—45% vs. 52% in January.
Figure
2
Shoppers' Perceived Household Financial Health Compared with Last Year
| |
Jan-
09 |
Feb-
09 |
Mar-
09 |
Apr-
09 |
May-
09 |
Jun-
09 |
Jul-
09 |
| Job security of employed household members |
|
|
|
|
|
|
|
| Much/Somewhat Better Off |
15% |
15% |
14% |
14% |
14% |
14% |
13% |
| No Change from Last Year |
61% |
60% |
59% |
60% |
61% |
59% |
61% |
| Somewhat/Much Worse Off |
24% |
25% |
28% |
27% |
25% |
27% |
25% |
| |
|
|
|
|
|
|
|
| Household income level |
|
|
|
|
|
|
|
| Much/Somewhat Better Off |
30% |
29% |
26% |
27% |
26% |
25% |
23% |
| No Change from Last Year |
43% |
43% |
42% |
42% |
43% |
42% |
45% |
| Somewhat/Much Worse Off |
27% |
28% |
32% |
31% |
31% |
33% |
32% |
| |
|
|
|
|
|
|
|
| Credit card debt level |
|
|
|
|
|
|
|
| Much/Somewhat Better Off |
24% |
24% |
25% |
26% |
25% |
26% |
25% |
| No Change from Last Year |
52% |
55% |
53% |
52% |
55% |
52% |
53% |
| Somewhat/Much Worse Off |
24% |
21% |
22% |
22% |
20% |
22% |
22% |
| |
|
|
|
|
|
|
| Monthly mortgage and car payments |
|
|
|
|
|
|
| Much/Somewhat Better Off |
17% |
18% |
17% |
18% |
18% |
18% |
18% |
| No Change from Last Year |
70% |
68% |
69% |
68% |
68% |
68% |
68% |
| Somewhat/Much Worse Off |
12% |
14% |
14% |
14% |
14% |
14% |
14% |
| |
|
|
|
|
|
| Worth of household members' investments |
|
|
|
|
|
| Much/Somewhat Better Off |
10% |
9% |
9% |
9% |
11% |
11% |
12% |
| No Change from Last Year |
39% |
39% |
37% |
38% |
42% |
40% |
43% |
| Somewhat/Much Worse Off |
52% |
52% |
54% |
53% |
47% |
49% |
45% |
| |
|
|
|
|
|
|
|
| Value of my home |
|
|
|
|
|
|
|
| Much/Somewhat Better Off |
14% |
13% |
13% |
13% |
14% |
13% |
15% |
| No Change from Last Year |
50% |
49% |
48% |
49% |
50% |
51% |
49% |
| Somewhat/Much Worse Off |
37% |
38% |
39% |
39% |
36% |
36% |
36% |
Source: Retail Forward ShopperScape™, January - July 2009
| BRACING FOR BACK-TO-SCHOOL |
 Some retailers are bracing for a disappointing BTS season by introducing holiday goods early. This year’s BTS shoppers are as likely to report plans to spend less this year as they are to spend more—significantly more pessimistic than the three previous years (Figure 3).
Figure
3
Plans to Spend on Back-to-School 2009 vs. 2008, 2007 and 2006
| |
Jul-06 |
Jul-07 |
Jul-08 |
Jul-09 |
| Plans to spend… |
|
|
|
|
| Much /somewhat more |
37% |
33% |
33% |
24% |
| About the same |
47% |
51% |
44% |
49% |
| Somewhat /much less |
13% |
13% |
19% |
24% |
| This is the first year I will be making back-to-school purchases |
3% |
3% |
4% |
3% |
Source: Retail Forward ShopperScape™
As they have for other types of shopping, shoppers are adopting limiting, deal-seeking and trading-down tactics to save money on both school supplies and BTS clothing and shoes (Figure 4).
- The deal-seeking tactic of waiting for good sales is most popular for both categories of goods. The majority of parents plan to wait for good sales to buy school supplies this year.
- Limiting types of shopping behaviors—such as sticking to buying only essential school supplies, reusing school supplies already around the house and buying fewer BTS clothes this year—will be commonplace.
- Trading down in shopping venues for school supplies edges out trading down in brands. Look for more BTS shoppers at dollar or closeout stores and supercenters.
- Trading down in brands for clothing will about equal trading down in venues to secondhand/thrift stores or off-price clothing retailers.
- More shoppers plan to shop at supercenters for school supplies than BTS clothing.
Figure
4
Strategies for Spending Less on…
| …School Supplies for Back-to-School |
| Wait for good sales |
59% |
| Stick to buying only essential items |
54% |
| Re-use school supplies I have around my home |
53% |
| Do more BTS shopping at dollar stores or closeout stores |
24% |
| Do more BTS shopping at supercenters |
17% |
| Purchase more private label or store-brand supplies instead of name brands |
15% |
| Other |
6% |
| I do not plan to limit my spending in any of these ways |
2% |
| |
|
| …Clothing and Shoes for Back-to-School |
| Wait for good sales |
45% |
| Just buying fewer BTS clothes this year |
39% |
| Purchase fewer name-brand clothing and shoes |
16% |
| Do more BTS shopping at secondhand/thrift stores |
15% |
| Do more BTS shopping at off-price clothing retailers |
15% |
| Do more BTS shopping at supercenters |
11% |
| Other |
4% |
| I do not plan to limit my spending in any of these ways |
5% |
Source: Retail Forward ShopperScape™, July 2009
Almost one in three (30%) shoppers will participate in BTS shopping this year and estimate they have already spent 33% of their BTS budgets (Figure 5).
- BTS shoppers plan to spend an average of $535 on BTS purchases this year.
Figure
5
Estimated Back-to-School Spending 2009
| Percentage of households already spending or plan to spend on BTS this year |
30% |
| |
|
| Percentage of households spending on BTS by third week in July |
18% |
| Average estimated BTS spending by third week in July by BTS shoppers |
$282 |
| Estimated percentage of spending to date |
33% |
| |
|
| Percentage of households planning to spend during rest of BTS season |
28% |
| Average estimated spending on BTS during rest of season by BTS shoppers |
$382 |
| |
|
| Average estimated total BTS spending by BTS shoppers |
$535 |
Source: Retail Forward ShopperScape™, July 2009
BTS spending increases as children progress with their educations. College-aged kids are most expensive to outfit (Figure 6).
Figure
6
Estimated Back-to-School Spending 2009
|
All BTS Shoppers, July 2009 |
|
Pre-
School |
Grade School |
Middle School |
High School |
College |
| Average estimated BTS spending by third week in July |
$282 |
|
$257 |
$244 |
$303 |
$381 |
$435 |
| |
|
|
|
|
|
|
|
| Average estimated BTS spending during rest of BTS season |
$382 |
|
$340 |
$337 |
$451 |
$504 |
$651 |
Note: Highlighting/bolding represents a significantly greater amount than the average for all BTS shoppers
Source: Retail Forward ShopperScape™, July 2009
Although this year’s BTS pie is estimated to shrink, BTS spending will be spread among various categories of goods in about the same proportions they have in past years (Figure 7).
- About half (49%) of BTS budgets will be spent on clothing and shoes—a slightly larger percentage than last year’s estimate (46%) at this point during the BTS season.
- Books and computers will each garner 13% of the BTS budget.
- Schools supplies will account for 11%.
Figure
7
Estimated Spending by Back-to-School Category
| |
Percentage of total estimated spending… |
Percentage Point Difference (2008 –
2009) |
| BTS Category |
2006 |
2007 |
2008 |
2009 |
| Clothing |
33% |
34% |
34% |
36% |
+2 |
| Shoes |
12% |
12% |
12% |
13% |
+1 |
| Books |
12% |
13% |
13% |
13% |
0 |
| Computers |
16% |
13% |
14% |
13% |
-1 |
| School supplies |
10% |
11% |
11% |
11% |
0 |
| Backpacks/school bags |
4% |
4% |
4% |
5% |
+1 |
| Dormitory furnishings/bedding/bath |
3% |
3% |
3% |
3% |
0 |
| Computer software |
2% |
2% |
3% |
3% |
0 |
| Other electronics |
3% |
3% |
3% |
3% |
0 |
| Other |
4% |
4% |
3% |
2% |
-1 |
Source: Retail Forward ShopperScape™
 The positive news about BTS this year is that a large percentage (39%) of parents plans to buy themselves clothes while BTS shopping (Figure 8).
- Almost two in five parents are likely to purchase clothing for themselves while BTS shopping. Good sales are likely to sway deal-seeking parents who are likely to be in that shopping mode for their kids’ clothing and shoes.
Down Market parents are least likely to shop for BTS clothing for their children—perhaps sticking only to school supplies or maybe allowing the kids to shop on their own. But, Down Market parents who are shopping for BTS clothes for their children are just as likely as more affluent parents to purchase clothes for themselves.
Figure
8
Likelihood of Purchasing Clothes for Oneself While Back-to-School Shopping
|
All BTS Shoppers |
|
Down Market |
Middle Market |
Up Market |
| Extremely likely |
13% |
|
14% |
13% |
13% |
| Somewhat likely |
26% |
|
26% |
25% |
27% |
| Not too likely |
30% |
|
25% |
28% |
36% |
| Not at all likely |
23% |
|
23% |
27% |
17% |
| I do not plan to shop for BTS clothes for my children |
8% |
|
12% |
7% |
7% |
Note: Highlighting/bolding indicates a percentage that is significantly greater than the percentage for all BTS shoppers Source: Retail Forward ShopperScape™, July 2009
ShopperScape™ members will receive more a more detailed analysis of current shopping trends and spending plans. ShopperScape™ members also can request assistance in custom analyses of this information by contacting Rachel McGuire (rmcguire@retailforward.com) or Mandy Putnam (mputnam@retailforward.com).
Walmart kicked off its Project Impact strategic plan late last year. Retail Forward views Project Impact as a game-changer—capable of altering the retail landscape and perhaps permanently shifting shopping patterns. Fundamentally, Project Impact is how Walmart now thinks about and organizes all aspects of its business—it cuts across all functional areas, including marketing, merchandising, store operations, etc. The ultimate goal: to drive traffic, basket size, growth and ROI. The essence of Project Impact can be boiled down to 10 key words, which articulate Walmart's go-to-market strategy and direct future capital spending: Save money. Live better. Fast, Friendly, Clean. Win, Play, Show. A big part of Project Impact is increased investment in store remodels and renovation. Chain-wide rollout is expected to take five years and be complete in 2013. Walmart reports that it already is seeing some positive results from Project Impact. The vendor and retail communities already are feeling some repercussion and reverberations as Walmart becomes a better marketer and merchandiser.
Sandy Skrovan
sskrovan@retailforward.com
| 