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Welcome to the ShopperScape™
Newsletter December 2008
- Hope that signs of shoppers nearing the bottom of curbing short-term spending plans hold.
- Don’t plan on a windfall from easing gasoline prices—especially if you’re not in the business of providing for basic needs such as groceries.
- Recognize that shoppers are more carefully budgeting for holiday shopping this year. Don’t expect to see as many shoppers buying “one for me” while shopping for others.
- Also recognize that almost one quarter of shoppers have traded down to discount retailers such as deep discounters and Walmart Supercenter, which are faring well relative to other retailers. Conversely, three-quarters of shoppers have not changed their store choice sets yet for grocery shopping but are likely still looking for bargains wherever and however they shop.
Bumping the Bottom
Despite deterioration in November same-store sales numbers, the November ShopperScape™ survey suggests that December sales could be at the bottom of shoppers’ worsening short-term spending intentions. (Figure 1):
- The percentage of households planning to spend less in the coming month—54%—held nearly steady in November. That’s good news after the number jumped in October after the financial crisis began to worsen dramatically in late September.
- The percentage of households planning to spend about the same in the coming month—39%—also held steady. The bad news is that only 7% of households plan to spend more, which is 10 percentage points less than prior to the financial sector meltdown.
Figure
1
Intentions to Spend More, the Same or Less at Retail Stores Compared to This Time Last Year
| |
February |
March |
April |
May |
June |
July |
August |
September |
October |
November |
| Spend Much/Somewhat More |
14% |
12% |
12% |
12% |
10% |
14% |
9% |
17% |
8% |
7% |
| Spend About the Same |
59% |
48% |
44% |
39% |
39% |
41% |
38% |
42% |
39% |
39% |
| Spend Much/Somewhat Less |
28% |
40% |
44% |
49% |
52% |
45% |
53% |
41% |
53% |
54% |
Source: TNS Retail Forward ShopperScape™, February to November 2008
The ShopperScape™ survey also suggests that shoppers’ perceptions of their household’s financial health are beginning to stabilize in some ways after plummeting on several fronts between last March and April (Figure 2).
- Shoppers are feeling a little more positive about their debts—credit card debt and monthly mortgage and car payments—compared with October.
- The percentages of households feeling “worse off” in terms of income and job security held steady in November although recently released unemployment numbers presage further erosion.
- Unfortunately, investments represented by household investments and home values continue to erode.
Figure
2
How Shoppers Perceive Household Financial Health Compared with Last Year
| |
Total Primary Shoppers March |
Total Primary Shoppers April |
Total Primary Shoppers October |
Total Primary Shoppers November |
| Job security of employed household members |
|
|
| Much/Somewhat Better Off |
23% |
16% |
17% |
16% |
| No Change From Last Year |
60% |
63% |
60% |
61% |
| Somewhat/Much Worse Off |
17% |
21% |
23% |
23% |
| |
|
|
|
|
| Household income level |
|
|
|
|
| Much/Somewhat Better Off |
38% |
30% |
28% |
27% |
| No Change From Last Year |
38% |
43% |
42% |
43% |
| Somewhat/Much Worse Off |
24% |
27% |
30% |
30% |
| |
|
|
|
|
| Credit card debt level |
|
|
|
|
| Much/Somewhat Better Off |
29% |
23% |
23% |
23% |
| No Change From Last Year |
50% |
52% |
51% |
52% |
| Somewhat/Much Worse Off |
21% |
25% |
26% |
25% |
| |
|
|
|
| Monthly mortgage and car payments |
|
|
|
| Much/Somewhat Better Off |
22% |
15% |
17% |
16% |
| No Change From Last Year |
63% |
67% |
65% |
69% |
| Somewhat/Much Worse Off |
15% |
18% |
18% |
15% |
| |
|
|
| Worth of household members. investments |
|
|
| Much/Somewhat Better Off |
25% |
16% |
10% |
9% |
| No Change From Last Year |
49% |
45% |
38% |
38% |
| Somewhat/Much Worse Off |
26% |
39% |
52% |
53% |
| |
|
|
|
|
| Value of my home |
|
|
|
|
| Much/Somewhat Better Off |
29% |
20% |
17% |
14% |
| No Change From Last Year |
49% |
48% |
49% |
50% |
| Somewhat/Much Worse Off |
22% |
32% |
34% |
36% |
Source: TNS Retail Forward ShopperScape™, March, April, October and November 2008
Easing gasoline prices have yet to change the majority of shoppers’ behaviors. Almost three-quarters (73%) of consumers report their household spending has not changed as gas prices have declined (Figure 3).
- Some shoppers (9%) have reallocated the monies previously spent on gasoline to groceries.
- Less commonly, shoppers are broadening their store choice sets once again (5%) or upping their holiday gift-buying budgets (5%).
Figure
3
Effect of Recent Decline in Gas Prices on Spending and Shopping
| Not changed household spending as a result of decreased gasoline price |
73% |
| Spending more on groceries |
9% |
| Shopping less at stores I’ve been shopping at only to save money |
5% |
| Not changed the amount spent on gasoline because driving more miles |
5% |
| Shopping around at more stores instead of doing one-stop shopping |
5% |
| Spending more on dining out |
4% |
| Spending more on goods for the home |
3% |
| Spending more on entertainment, leisure activities or travel |
3% |
| (Net) spending more on holiday gifts (general and children) |
5% |
| Spending or planning to spend more on holiday gifts |
3% |
| Spending or planning to spend more on children’s holiday gifts |
3% |
| Spending more on clothing |
2% |
| Trading up from less expensive to better brands |
1% |
| Shopping at more expensive stores |
1% |
| Other (specify) |
2% |
Source: TNS Retail Forward ShopperScape™, November 2008
Holiday and Beyond at a Discount
It’s no surprise that shoppers are spending significantly less this holiday than last year—planning to spend $476 this year vs. $590 last year on average. But this year, shoppers are less likely not to know what they’re planning to spend or what part of their holiday budgets they’ve spent to date—i.e. more shoppers seem to have a definitive budget in mind and be more aware of how their spending is stacking up against that budget. There will be less opportunity to reap incremental sales from impulse purchases (Figure 4).
Figure
4
Plans to Spend on Holiday Gifts This Year Compared with Last Year
|
November 2007 |
November 2008 |
A lot more |
3% |
2% |
Somewhat more |
11% |
5% |
About the same amount |
48% |
35% |
Somewhat less |
21% |
28% |
A lot less |
12% |
24% |
I don’t buy holiday gifts |
5% |
6% |
| |
|
|
|
|
|
Average spending planned |
$590 |
$476 |
Percentage stating "don't know" |
37% |
26% |
| |
|
|
|
|
|
Percentage of holiday budget spent so far |
24% |
24% |
Percentage stating "don't know" |
14% |
11% |
Highlighting/bolding indicates significant differences between column percentages/amounts
Source: TNS ShopperScape™, November 2007 and November 2008
The weak economic environment will continue to skew holiday shopping toward retail formats that offer value or that primarily meet everyday needs (Figure 5).
- Discount stores, supercenters, warehouse clubs and small-format retailers such as dollar stores are among the few retail channels where the same or a greater number of shoppers than last year plan to shop for holiday gifts. Also drawing the same or a greater number of shoppers are grocery stores.
- Fewer shoppers than last year plan to shop all other retail channels. Big holiday-shopping channels seeing significant drop offs include value and traditional department stores, book stores and toy stores. Sales also will be softer at consumer electronics stores, factory outlet stores, specialty apparel retailers, personal care and beauty stores and sporting goods stores as well as at some less-popular holiday shopping channels.
Figure 5
Channels Planning to Shop for Holiday Gifts
|
November 2007 |
November 2008 |
Discount store/supercenter retailers |
35% |
36% |
Value department store retailers (such as Sears, JCPenney, Kohl’s, etc.) |
30% |
28% |
Traditional department store retailers (such as Dillards, Macy’s, Belk, etc.) |
22% |
18% |
Book and media retailers |
21% |
17% |
Toy retailers |
22% |
17% |
Warehouse clubs |
15% |
15% |
Consumer electronics/appliance/computer retailers |
12% |
10% |
Factory outlet stores |
12% |
10% |
Grocery stores/supermarkets |
8% |
8% |
Specialty apparel store retailers (such as Gap, Chico’s, Ann Taylor, etc.) |
12% |
8% |
Small-format value store retailers (such as dollar stores) |
7% |
7% |
Personal care and beauty retailers |
9% |
6% |
Sporting goods retailers |
8% |
6% |
Crafts or fabrics store retailers |
7% |
6% |
Drug store retailers |
6% |
5% |
Home improvement/hardware store retailers |
7% |
5% |
Gadget/gift/theme retailers |
6% |
5% |
Upscale department store retailers (such as Nordstrom, Bloomingdale’s, Saks 5th Avenue, etc.) |
6% |
4% |
Home furnishings/domestics store retailers |
5% |
3% |
Jewelry store retailers |
4% |
3% |
Shoe store retailers |
3% |
3% |
Office supply retailers |
3% |
2% |
Other |
9% |
10% |
Don't know |
20% |
20% |
Highlighting/bolding indicates significant differences between column percentages
Source: TNS Retail Forward ShopperScape™, November 2007 and 2008
About one-quarter (24%) of shoppers say they have changed where they shop for groceries and other households items given the current economic climate (Figure 6).
- Conversely, three-quarters (76%) of shoppers continue to shop within their store choice sets.
Percentage of Shoppers Changing Where They Shop for Groceries and
Other Household Items Given Current Economic Conditions
Source: TNS Retail Forward ShopperScape™, November 2008
Shoppers changing where they shop are trading down primarily to dollar stores and cut-price/warehouse supermarkets such as Save-A-Lot, ALDI and Cub Food as well as Walmart Supercenter (Figure 7).
- These shoppers have shifted away most from convenience stores, higher-priced grocery channels and discount stores other than Walmart.
Figure
7
Retailers and Channels Shopping More, Less or the Same Amount Given Current Economic Conditions (Base = Shoppers Changing Where They Shop for Groceries and Other Household Items)
|
Shopping More
Often |
Shopping about the Same |
Shopping Less
Often |
Do Not Shop |
PPD Shopping More vs. Shopping Less Often |
Dollar store |
33% |
34% |
14% |
19% |
+19 |
Cut-price/warehouse supermarket (e.g., Save-A-Lot, Aldi, Cub Food, Food 4 Less, SaveRite) |
23% |
19% |
10% |
48% |
+13 |
Walmart Supercenter |
24% |
31% |
19% |
27% |
+5 |
Walmart discount store |
14% |
27% |
21% |
38% |
-7 |
Membership warehouse club |
14% |
27% |
22% |
38% |
-8 |
SuperTarget |
6% |
19% |
18% |
57% |
-12 |
Kmart, Big Kmart, or Super Kmart Center |
6% |
28% |
22% |
44% |
-16 |
Convenience store for gasoline purchases |
6% |
44% |
24% |
26% |
-18 |
Specialty food store/neighborhood specialty market (e.g., Trader Joe’s, The Fresh Market, etc.) |
5% |
15% |
24% |
56% |
-19 |
Other supermarkets, including conventional supermarkets such as Albertsons, Kroger, Safeway etc. |
8% |
45% |
29% |
17% |
-21 |
Target general merchandise store |
8% |
34% |
31% |
27% |
-22 |
Drug store |
10% |
43% |
32% |
15% |
-22 |
Health/natural foods supermarket (e.g., Whole Foods, Wild Oats) |
4% |
14% |
26% |
57% |
-22 |
Convenience store for in-store merchandise purchase |
4% |
21% |
28% |
48% |
-24 |
Source: TNS Retail Forward ShopperScape™, November 2008
ShopperScape™ members will receive more a more detailed analysis of holiday shopping plans, including sections on gift card and online purchasing plans and which categories will retain their popularity this year. ShopperScape™ members can also request assistance in custom analyses of this information by contacting
rmcguire@retailforward.com or mputnam@retailforward.com.
Economic Forecast: Outlook to 2013
Retailers beware: The worst is yet to come. Already on pace to increase only 2.8% in 2008, core retail sales (excluding automobiles and gasoline) are forecast to further slow next year to a 2.3% year-to-year increase. An anticipated rebound in 2010 will gain momentum through 2013, when annual increases in sales will again approach the roughly 5% average growth rate of the past 10 years.
Growth in inflation-adjusted or unit terms, however, will not bounce back as strongly. Although inflation-adjusted growth in core retail sales should rebound toward 4%, this will represent a decline from the 5% pace averaged during the 10 years prior to 2008. The difference represents the demand-dampening effect of inflation. Inflation is forecast to ease from its highs of early 2008, but price pressures will persist in categories such as fuel and food.
Detailed retail channel and category sales forecasts are available to members of the Food Drug Mass, Homegoods and Softgoods programs of the Retail Forward Intelligence System™ (RFIS) at www.retailforward.com. For more information about RFIS, please contact Katherine R. Clarke at kclarke@retailforward.com or 614-355-4009. |
What's
TNS Retail Forward ShopperScape™?
TNS Retail Forward ShopperScape™ focuses on today’s consumers and their shopping behaviors. TNS 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. TNS Retail Forward ShopperScape™ is administered through TNS’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/retailintel/ss_default.asp. |
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