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Welcome to the ShopperScape™ Newsletter October 2008

• Expect shoppers’ appetites for spending to remain subdued for as long as the economic roller coaster continues to churn stomachs.
• Anticipate Halloween to provide more tricks than treats vs. 2007.  Although shoppers won’t be able to pass out last year’s candy, they won’t be buying the “big-size” bars.  Many will revive previous years’ decorations and costumes rather than buying new ones.
• Look for shoppers to make simpler, family-oriented holiday plans this year.  As with Halloween, shoppers will be more likely to haul out the old holiday decorations from storage than buy new ones.  Limited funds will be directed toward immediate family members—some including pets in that definition.  Elaborate wrappings will be rare.  Homemade gifts could enjoy a comeback. 
• Expect wine, beer and liquor to continue flowing through the troubled times ahead.   

Before the Bailout

Before the bailout, shoppers in September indicated they were becoming more inclined to open their wallets in the coming month vs. how they felt in August (Figure 1).  Up Market shoppers’ propensities to spend reawakened and signaled that their period of pecuniary austerity might pause at least for the holidays. 

• Down and Middle Market shoppers remained cautious, but Up Market shoppers were less likely to plan to cut back on spending during the coming month.
• However, with the Up Market experiencing motion sickness from the past couple weeks’ rocky roller coaster ride on Wall Street, many have no doubt lost their appetites for spending again. 

Figure 1

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

Highlighting/boldingindicates significant differences between segment percentage vs. all shoppers in September 2008

Source: TNS Retail Forward ShopperScape™, September 2008

Not-so-happy Haunting

On a positive note, about the same percentage of shoppers (70%) plan to spend on Halloween this year as did last year (68%) (Figure 2).

• But the percentage of shoppers planning to spend less on Halloween this year (29%) is significantly higher vs. 2007 (21%) and 2006 (17%).
• Up Market shoppers are most likely to plan to participate in the festivities and least likely to plan to cut back on tricks or treats.

Figure 2

Compared to last year, do you plan to spend more, the same, or less this year on Halloween?

Highlighting/bolding indicates significant differences between segment percentage vs. all shoppers in 2008
Source: TNS Retail Forward ShopperScape™, September 2008

Slightly lower percentages of shoppers plan to spend on many Halloween-related categories this year vs. last year.  And the amounts shoppers are planning to spend on all listed categories declined between 3% (for “other’) and 8% (for indoor decorations) this year vs. last.  Fewer shoppers of most categories coupled with less spending planned for all categories translate to fairly significant declines in total estimated Halloween spending from last year: $34 in 2007 to $31 in 2008, on average, for all shoppers; and $51 in 2007 to $44 in 2008, on average, for shoppers planning to spend on Halloween (Figure 3).

Figure 3

Comparisons between Halloween Estimated Spending 2006, 2007, 2008

*Among shoppers planning to spend on the category
Source: TNS Retail Forward ShopperScape™, September 2008

Have Yourself a Very Little Xmas

Compared with last year, the percentage of shoppers planning to spend the same as they did the previous year on the upcoming holidays slipped by 12 percentage points (Figure 4).

• A greater share of the decline comes from Down and Middle Market shoppers than from Up Market shoppers.  However, the percentage of Up Market shoppers planning to spend less is more than twice the percentage planning to  spend more this holiday.  Clearly, the Up Market also is feeling pressured.

Figure 4

Compared to last year, do you plan to spend more, the same, or less this year on holiday gifts including gift cards?

Highlighting/bolding indicates significant differences between segment percentage vs. all shoppers in September 2008
Source: TNS Retail Forward ShopperScape™

Least vulnerable to holiday cutbacks will be gifts for children and spouses/partners, but more shoppers plan to spend less this year on such gifts than those planning to increase their spending.  Although shoppers who buy holiday gifts for their pets are in the minority (43%), those who do spend on Fido or Fluffy are unlikely to disappoint these furry family members (Figure 5).

• Look for shoppers to save money by packaging gifts with inexpensive wrappings and relying on last year’s ornaments and decorations to provide a festive environment.  Electricity-hogging lights will be a rare sight in neighborhoods.  Homemade gifts and decorations could experience a resurgence.
• Friends and relatives outside the immediate family should shorten their wish lists this holiday.
• Social activities, such as holiday travel, hosting parties and sending holiday greetings cards, also are likely to be more modest this year.

Shoppers are experiencing troubled times over which they feel limited control.  Nostalgic messages about simpler, less materialistic holidays are likely to resonate with today’s consumers. 

Compared to last year, do you plan to spend more, the same or less this year on...?

Drink Up, Deli Down

Year-to-year comparisons of the percentage of shoppers purchasing within particular categories of goods suggest that more consumers are drowning their sorrows these days—but not with carbonated soft drinks or bottled water (Figure 6).

• In addition to beer/wine, other categories showing slight upticks include gasoline (likely because shoppers have to buy it often), dairy, salty snacks and sporting goods..
• Categories showing no year-to-year gains or losses in terms of the percentages of shoppers buying them include produce, household paper goods, home improvement/hardware/lawn & garden (combined into one category), color cosmetics, small appliances and consumer electronics.
• In addition to the delicatessen, other categories showing higher-than-average percentage point declines include household cleaning products, carbonated beverages, non-carbonated beverage and home textiles/décor.

Figure 6

Comparison between Percentages of Shoppers Purchasing Category in Past Four Weeks in
September 2007 vs. September 2008

Source: TNS Retail Forward ShopperScape™, September 2007 and September 2008

Shopper Update: Target—Economic Impact on Target Shoppers, September 2008

The pressures of a challenging economy, including high gasoline prices, rising food prices, sliding home values and investment concerns, are catching up with Target shoppers. Despite lagging all shoppers, who began changing their shopping behavior months ago, TNS Retail Forward ShopperScape™ data indicates that Target shoppers also are now shifting their shopping patterns—e.g., seeking deals, cutting back and trading down—due to the difficult economic climate. Some moves could lead to permanent shifts in shopping behavior—which could challenge Target’s position. Protecting and maintaining share of wallet requires responding effectively now.

For more information on Target—Economic Impact on Target Shoppers 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!

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