If you cannot read this ShopperScape(tm) Newsletter for September 2004, go to http://www.retailforward.com/shopperscape/shopperscape1004.htm

Welcome to the ShopperScape™ Newsletter October 2004

• Look forward to more of a shopper second wind than a perfect storm.
  
• Expect the holidays to split between the "happy holiday haves" and the "have not humbugs."
  
• Prepare for slightly looser purse strings if you cater to haves.
  
• Plan on promotions to wake up Scrooges that still dream about ghosts of Christmas past.
  
• Don't hold your breath for employed Americans to suit up for work any time in the near future.
  
• Shoppers plan to spend more to accessorize the house, and themselves.
  

Suiting up: a Madison Avenue Myth

The consumer movement back to formal business attire is more wishful thinking than reality. Employed respondents in our latest survey are seven times more likely to disagree than agree that their workday dress is shifting toward more formal business attire. And, this holds true across the Down, Middle and Up Market.

No matter how much retailers would like to think that shoppers are dropping more dollars on tailored and higher-end business clothes, it simply is not so. In fact, among shoppers that purchased suits last fall, the average number they plan to purchase this fall is not much different from the average number that they bought last year.

Happy Holidays for the Haves and Humbug for the Have Nots

If present sentiment prevails, holiday spending will be split along income lines with Up Market households opening their purse strings and Down Market households shopping like Scrooge.

• Up Market households plan to spend about $1,162 on gifts this year on average. Twenty-three percent plan to spend more than last year compared with 21% who plan to curb their spending.
• More than three-quarters of Up Market households said they will spend about the same amount at upscale retailers as they did last year, while 6% intend to spend more.
• In contrast, Down Market households plan to spend $345 on gifts this year on average. Nearly twice as many Down Market households indicated they will spend less (32%) than will spend more (17%) during the holidays.
• Sixteen percent of Down Market households said they will spend more of their holiday budgets at Wal-Mart this year, compared with 19% who plan to spend less.
• Middle Market households plan to spend $625 on gifts this year on average. Even the Middle Market shows a few Scrooge-like signs with 27% of them planning to spend less this year, compared with 20% who plan to spend more.
• The Internet should boost its share of holiday sales this year. Sixteen percent of all shoppers plan to spend more online, greater than the 14% who plan to spend less. Up Market households, which make up a large portion of overall sales, are much more likely than Middle and Down Market households to have plans to increase their Internet spending.
  

Summer Soft Patch to Persist.

The Retail Forward Index of Future Spending™ slipped this month to 100.7 from 102.7 last month. Although the Up Market strengthened its spending plans, that gain was offset by a drop among Middle and Down Market households. The Middle Market, in particular, softened spending plans, which reflected downgrades in evaluations of strength of incomes and the job market. Many Down Market households are similarly unconvinced that the job market is improving, which resulted in a more pessimistic outlook for this segment as well.

• In October, the index for Up Market households (incomes greater than $75,000) improved to 101.2 from a reading of 99.3 the month before as assessments of job security rebounded to the highest levels of the year. Home buying and refinancing activity are also bolstering the outlook in this segment, offsetting a moderation in views about investments amid a stagnant stock market.
• The index for Middle Market households (incomes between $22,500 and $75,000) moderated to 98.3 in October from 103.8 last month, suggesting the pace of spending in this cohort should weaken this month. More subdued assessments of jobs and incomes offset an improvement in refinancing activity to produce the softer outlook.
• The index for Down Market households (incomes less than $22,500) downshifted in October for the second straight month. The Index came in at 106.3, down from an upwardly revised 108.5 in September, as job concerns and a slowdown in home buying offset the impact of a more favorable view of debt burdens.
  

The Retail Forward Index of Future Spending combines households' current assessments of key drivers of spending across income segments, including the job situation, incomes, investments, debt levels, home buying, and seasonal factors to produce a forward-looking indicator of spending for the coming month.

Wal-Mart.com half as popular as the stores

ShopperScape™ results show that around 47% of all primary household shoppers go to Wal-Mart or Wal-Mart Supercenter monthly. About half as many (23%) visit Wal-Mart's online site at least once a month.

Fifteen percent of all shoppers have purchased from Wal-Mart.com. Up Market households are more likely than Down Market household to have bought from the Web site.

Despite the high penetration of Wal-Mart.com overall, only 2% of primary household shoppers have bought clothing there. However, Wal-Mart has only recently relaunched apparel buying on the site, and that proportion may increase.

Wal-Mart.com apparel offer popular with Down Market online purchasers

The overall web offering is attracting a consistent proportion of shoppers across Markets. However, among shoppers who have made a purchase at Wal-Mart.com, Down Market shoppers are almost 10 percentage points more likely to have purchased clothing at the site than shoppers in other Markets. One out of every five Down Market purchasers has bought clothing at Wal-mart.com.