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Welcome to the ShopperScape™ Newsletter November 2006 PREDICTIONS Expect shoppers—especially Down Market shoppers—to exercise some restraint in spending compared to last year's strong holiday spending. Shoppers' expectations about holiday shopping are in sync with Retail Forward's forecast of 5.5% growth in total sales for key holiday retail channels—down from 7.2% last year. Prepare for eight out of 10 holiday shoppers to buy at least one gift card this season. Note that gift cards may account for close to one-fifth of holiday spending if shoppers' predictions hold true. HOT OFF THE PRESS Most Shoppers Plan Holiday Gift Spending Comparable to Last Year Retail Forward's ShopperScape™ survey results indicate that the majority of all shoppers plan to spend about the same as they did last year on holiday gifts. However, compared with last month and also compared with November 2005, fewer shoppers are saying right now that they are going to spend the same as last year and more are saying they are going to spend less. Down Market shoppers are most cautious about holiday spending this year with more than half planning to spend less than last year or nothing at all. And, Down Market shoppers who are buying holiday gifts estimate spending only about half as much as all shoppers. More than half (55%) of all shoppers plan to spend about the same amount on holiday gifts this year compared with last year. However, more than twice as many shoppers plan to spend somewhat/much less this year (28%) compared to those that plan to spend somewhat/much more (11%) (Figure 1). Nearly three times as many Down Market shoppers (17%) plan to spend much less on holiday gifts this year compared to Up Market shoppers (6%). Overall, shoppers who plan to purchase holiday gifts plan to spend an average of $664 on holiday gifts this year. Up Market holiday shoppers will spend the most at $974, Middle Market shoppers plan to spend an average of $545 and Down Market shoppers plan to spend an average of $358. Figure 1 Which of the following categories best describes how much you think you will spend on holiday gifts this year (for holidays including Christmas, Chanukah/Hanukkah, or Kwanza) compared to last year?     All Shoppers Down Market Middle Market Up Market Much more   2% 2% 2% 3% Somewhat more   9% 6% 10% 11% About the same amount   55% 43% 55% 61% Somewhat less   19% 20% 19% 17% Much less   9% 17% 9% 6% I don't buy holiday gifts   6% 11% 5% 3% How much do you plan to spend on holiday gifts this year? *     All Shoppers Down Market Middle Market Up Market Average amount planning to spend   $664 $358 $545 $974 * For shoppers buying holiday gifts. Source: Retail Forward ShopperScape™. Gift Card Gains Many shoppers will purchase increasingly popular gift cards this holiday season. In fact, nearly eight out of 10 holiday shoppers plan to purchase at least one gift card this holiday season. Gift cards could represent close to one-fifth of holiday spending if shoppers' predictions hold true. Up Market shoppers are most likely to purchase at least one gift card this holiday season with 84% reporting a planned gift card purchase. However, Middle Market holiday gift shoppers are not far behind with 80% planning to purchase at least one gift card. Sixty-eight percent of holiday Down Market shoppers will purchase gift cards for loved ones this year (Figure 2). On average, purchasers plan to spend $149 on gift cards. Up Market gift card purchasers plan to spend the most on gift cards ($199) while Down Market gift card purchasers plan to spend less than half that amount ($84). Middle Market gift card purchasers plan to spend close to the average amount ($136). Figure 2 Will you purchase at least one gift card this holiday season?   All Shoppers Down Market Middle Market Up Market Yes 79% 68% 80% 84% No 21% 32% 20% 16% How much do you plan to spend on all gift cards this holiday season?*   All Shoppers Down Market Middle Market Up Market Average amount planning to spend on gift cards $149 $84 $136 $199 * For shoppers buying holiday gifts who are planning to buy gift cards. Source: Retail Forward ShopperScape™. SHOPPER INSIGHTS Long Histories, Large Presence and Moderate Fashion Make for High Conversion Rates in Apparel Private Brands Among shoppers of Kohl's, JCPenney, Sears, Macy's, Target and Wal-Mart, apparel private brands with the highest conversion rates include those with the longer histories, larger presence in the stores and more moderate fashion positions (Figure 3). Kohl's Sonoma and Croft & Barrow brands hold the leading and third positions among the top 10. Wal-Mart has the most brands, four—Faded Glory, White Stag, George and No Boundaries—in the top 10. Target has three brands in the top 10—Mossimo, Cherokee and Merona. JCPenney's St. John's Bay rounds out the list. Figure 3 Top 10 Private Brands, Ranked by Highest Conversion Rate1 among Female Past-Six Month Shoppers at Retailer* Retailer Brand Seen Shopped Purchased Conversion Rate 1 Kohl's Sonoma 70%2 43%3 34%4 48%5 Wal-Mart Faded Glory 74% 41% 34% 47% Kohl's Croft & Barrow 62% 35% 27% 44% Wal-Mart White Stag 67% 35% 28% 42% Target Mossimo 61% 33% 24% 40% Target Cherokee 74% 38% 29% 39% JCPenney St. John's Bay 79% 41% 30% 38% Wal-Mart George 30% 15% 12% 38% Wal-Mart No Boundaries 50% 24% 19% 37% Target Merona 44% 21% 16% 36% *Survey included brands at JCPenney, Kohl's, Macy's, Sears, Target and WalMart. 1 Share of those shoppers aware of brand who have purchased the brand. 2 Read as: 70% of past six-month female Kohl’s shoppers have seen Sonoma-brand products while shopping at Kohl’s. 3 Read as: 43% of past six-month female Kohl’s shoppers have shopped Sonoma-brand products while shopping at Kohl’s. 4 Read as: 34% of past six-month female Kohl’s shoppers have purchased Sonoma-brand products in the past six months. 5 Read as: 48% of past six-month female Kohl’s shoppers aware of the Sonoma brand have purchased Sonoma-brand products. Source: Retail Forward ShopperScape™. In-depth analysis of leading apparel private brands is available in the Shopper Update: Softgoods, September 2006. In-depth analysis of apparel shopping at Wal-Mart, including private brands, is found in the Wal-Mart World™ Shopper Update—Apparel Shopping Woes, October 2006. And, an analysis of Target's apparel offer is presented in the Target Shopper Update—Apparel Shopping, October 2006. POINT OF VIEW Wal-Mart World™ Shopper Update—Apparel Shopping Woes, October 2006 "Wal-Mart has failed to make headway in apparel during the past two years despite the introduction of new private brands, e.g., Metro 7, George M.E., designed to lure more supercenter shoppers across the aisle from the grocery and health and beauty care departments. Apparel private brands enjoying the most success at Wal-Mart are the ones with which shoppers have been familiar for a long time. Although demand exists for contemporary fashion, the volume of business for the mass market resides in the middle-of-the-road to basic end of the fashion spectrum. And while a brand such as Danskin Now does a better job in attracting upscale customers who are willing to cross the aisle for categories such as athletic wear and kid's clothes, more affluent Wal-Mart shoppers are by no means shopping the entire apparel offering." Mandy Putnam, Vice President and Manager of ShopperScape™ and Sandy Skrovan, Vice President and Manager of Wal-Mart World™. For more information on Retail Forward's reports or the Retail Forward Intelligence System™ call Kathy Clarke at 614-355-4009 or email her at kclarke@retailforward.com. What's Retail Forward ShopperScape™? Retail Forward ShopperScape™ focuses on today's consumers and their shopping behaviors. 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. 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 and select ShopperScape™ under Product & Services in the navigation bar located at the top of the home page to view sample reports and learn more about how to access ShopperScape™ information. 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 Retail Forward newsletters, click here. If you would like to stop receiving the ShopperScape™ Monthly newsletter, please edit your content preferences here.