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Welcome to the ShopperScape™ Newsletter November 2009

TAKING STOCK A YEAR AFTER THE BIG BAILOUT

A year after the passage of the Emergency Economic Stabilization Act of 2008, which ironically destabilized holiday shopping sentiment last holiday season, shoppers remain cautious—but not as pessimistic—entering this holiday season (Figure 1).

• The downside: Only 9% of shoppers plan to increase their near-term spending compared with 8% a year ago.
• The upside: the percentage of shoppers planning to curb their near-term spending declined from 53% to 45% year-to-year.    
  

Figure 1

Intentions to Spend at Retail Stores in the Coming Month Compared with Last Year

Source: Retail Forward ShopperScape™, October 2008 to October 2009

Year-to-year comparisons of measures of household financial health point to stagnant household income levels as a driver of consumer caution (Figure 2).

• Shoppers who feel better off than last year about their household income levels recorded the sharpest YTY decline: from 28% in October 2008 to 24% in October 2009.
• In contrast, the most positive uptick is among consumers who feel better off about their household members’ investments: up from 10% to 20%.
• More shoppers are better off in terms of their credit card debt levels and monthly mortgage and car payments than are worse off.
• For the other four measures of household financial health, however, the percentages of shoppers feeling worse off exceed percentages feeling better off. The result is a tempering in enthusiasm for holiday gift spending.

Figure 2

Shoppers' Perceived Household Financial Health Compared with Last Year

Source: Retail Forward ShopperScape™, October 2008 and October 2009

CAUTIOUS AND INDECISIVE—RECIPE FOR A NERVOUS HOLIDAY

Holiday gift shoppers are wary about spending any more than they did last holiday, but fewer are planning to cut back on their spending (Figure 3).

• Only 7% plan to spend more this year on holiday gifts—the same percentage as last October.
• Although 45% of shoppers say they are going to curb holiday gift spending, this percentage is significantly less than the 50% who planned cutbacks in October 2008.

Currently, the average amount shoppers who have a holiday gift budget in mind plan to spend is less than last year: $531 vs. $558.  However, shoppers are significantly more indecisive this year about how much they plan to spend on holiday gifts: 42% don’t know how much they will spend and 20% don’t know how much of their budget they’ve spent so far.  Among the 80% of shoppers who estimated what they’ve spent so far, shoppers have spent an estimated 11% of their gift budgets—the same percentage as last year at this time.

Figure 3

Spending on Holiday Gifts This Year Compared with Last Year

Note: Highlighting/bolding indicates a significant year-to-year difference (95% confidence level)
Source: Retail Forward ShopperScape™, October 2008 and October 2009

Shoppers also are indecisive about whether they will give gift cards as holiday gifts this year.  Significantly fewer shoppers (57%) plan to purchase gift cards as holiday gifts this year compared with last year (63%).  But significantly more shoppers (28%) are undecided (Figure 4).  

Figure 4

Holiday Gift Card Purchasing Plans

Note: Highlighting/bolding indicates a significant year-to-year difference (95% confidence level)
Source: Retail Forward ShopperScape™, October 2008 and October 2009

Many shoppers also remain undecided about whether they will shop and/or make gift purchases online this year (Figure 5).

• About one-third (31%) don’t know whether they will shop online for gifts.
• Thirty percent plan to both shop and buy online.
  

Figure 5

Percentages of Shoppers Planning to Shop For and Purchase Holiday Gifts Online

Source: Retail Forward ShopperScape™, October 2009

CASH IS KING FOR HOLIDAY GIFT SHOPPING

Look for the majority of shoppers to use cash or its equivalent to pay for most holiday gifts this year (Figure 6).

• Only about one-third (35%) of shoppers plans to use major credit cards for most of their payments.
• Just 1% plan to use a retail store credit card to pay for most of their holiday gifts.

Figure 6

Which One Payment Method Planning to Use to Pay for Most Holiday Gifts

Source: Retail Forward ShopperScape™, October 2009

These findings jibe with a general trend toward using cash or its equivalent instead of racking up debt to pay for purchases.  Almost half (49%) of shoppers agree they are using cash, checks or debit cards to pay for more purchases compared with a year ago (Figure 7).

• In sharp contrast, fewer than one in 10 (9%) of shoppers agree they are using store credit cards to pay for more purchases.

Figure 7

Methods Using More Compared with a Year Ago to Pay for More Purchases

Source: Retail Forward ShopperScape™, October 2009

BLACK FRIDAY AND CYBER MONDAY

A fairly small but highly visible percentage of shoppers participate in Black Friday mayhem.  This year, 13% of holiday shoppers plan to shop on Black Friday and 7% plan to shop on Cyber Monday (Figure 8).

Figure 8

Percentage of Holiday Shoppers Who Plan to Shop on Black Friday and Cyber Monday

Source: Retail Forward ShopperScape™, October 2009

Deal-seeking is the top motivation for making the perilous trip to stores on Black Friday.  Two-thirds (68%) of Black Friday shoppers will only buy holiday gifts if they find truly good deals (Figure 9).

• More than half (55%) of Black Friday shoppers are prepared to wait in long lines for deals.
• The dust from the stampede will be thickest at discount stores/supercenters.

Figure 9

Percentage Who Strongly Agree/Agree About Plans to Shop on Black Friday

Source: Retail Forward ShopperScape™, October 2009

ShopperScape™ members will receive a more detailed analysis of current shopping trends and spending plans for the holiday. 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).

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Planning your next sales meeting or strategic planning session?  Looking for a retail expert with a compelling story?  Look to Retail Forward.  Our team of economists, shopper insights and retail analysts share their latest thinking on the evolving retail landscape and help our clients prepare for what lies ahead.  

Presentations from our 2009 Strategic Outlook Conference covered:

• The short-term and long-term implications of key macroeconomic issues for the retail sector.  
• Crucial challenges that lie ahead in the post-recession retail landscape.
• How and to what degree shopping behaviors and the consumer mindset are likely to be redefined as a result of the recession.
• Strategies to leverage the proliferation of social networking and the evolution of in-store technologies to create more meaningful and actionable dialog with your target shoppers.
• A tour of new retail business models and innovations.

To learn more about Retail Forward’s Speaker’s Bureau and to find out about special member pricing for your next company event, contact Katherine Clarke at kclarke@retailforward.com or 614.355.4009.

For more information about RFIS reports and ShopperScape™, please contact Katherine R. Clarke at kclarke@retailforward.com or 614-355-4009.

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