BIG Executive Briefing
Economic & Consumer Insights for Marketing Executives

 

December 2008 (Respondents surveyed 12/2 - 12/9/08)

Talking Points:

§     Recession brings new woes to consumer confidence

§     One in two remain practical purchasers headed into ‘09

§     Record high expect “more” layoffs in the next 6 months

§     New Year pump price prediction: $2.09

§     Going green to reduce home heating expenses

§     Recessionistas “only” buying clothing on sale

§     Consumer Migration: Children’s Toys

§     TVs, digital cameras continued bright spots in high-$ spending

§     What Hot? Hearing the cha-ching at the computer…

 

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The President-elect produced a slight renewal in confidence in November, but it appears that the confirmed recession has brought new woes to U.S. consumers…only one in five (20.0%) contend they are confident/very confident in chances for a strong economy, lowering from 22.3% last month and 17 points from one year ago (37.0%). 

 

Given a crystal ball, though, consumers prove that they aren’t completely without hope…three in five (59.1%) are confident/very confident in chances for a strong economy five years from now, once Obama’s had a chance to walk the walk.

 

As Obama preps for January’s inauguration, consumers’ concern with political/national security issues continues to trend downward…one in four (25.0%) continues to worry, lowering almost four points from November (28.7%), but still substantially higher compared to a year ago (18.0%)...terrorist trouble in Mumbai might be keeping this reading inflated v. '07.

 

Consumers remain resolute about their penchant toward practicality, but the bright side for retailers is that this figure didn’t increase from November…for the second consecutive month, one in two (49.8%) affirms they’ve become more practical in purchasing, representing about a ten point gain from December ’07 (40.3%).

 

The abundance of promotions, discounts, and coupons available for this holiday’s buyers’ market, appears to have swayed some shoppers into checking a few items off of their own wish lists…those focused on needs over wants declined slightly this month to 56.5% from November’s record high 58.2%.  Retailers shouldn’t get too excited, though…this figure still rose almost ten points from December ’07 (47.4%).

 

 

 

 

A confirmed recession, rising unemployment, and Three Big employers pleading for their survival on Capitol Hill, renew consumers’ concerns for workforce stability.  This month, 66.4% - a new high - indicate they expect “more” layoffs in the next six months, rising from 59.4% in November.  One-quarter (25.9%) expects the “same,” lowering from 30.7% last month, while a paltry 7.7% hope for “fewer” (v. 9.8% last month).  Personal concerns with becoming laid off also rise slightly…8.4% report they fear the pink slip, up from 8.2% who said the same 30 days ago and 4.5% indicating so 365 days ago.

 

With visions of sugar plums dancing in many heads, it would sure be hard to cancel Christmas altogether, and shoppers are augmenting their fiscal intentions to ensure that Santa still slides down their chimneys…consumers continue to ease back on their intent to decrease overall spending with 33.4% indicating they plan to do so over the next three months, lowering from 35.5% in November.  Pay down debt is December’s piggy bank priority at 35.5%, down from 36.3% last month, while increasing savings (26.0%) declines half a point.  The credit crunch has consumers continuing to reach for cash, though…23.8% are avoiding the “Charge It!” mantra, up from 23.5% last month and 21.2% last year.  This is all better news for retailers hoping to ring up sales now, but brace yourselves: New Year’s resolutions are sure to be prudent.

 

It seems that the see-sawing Dow has bearish investors headed toward hibernation…44.0% of investors report they would definitely/probably invest in the stock market, faltering almost 3 points from last month (46.8%).  However, with the deals to be had in the market, more than one in ten (11.5%) investors still intend to buy stocks in the next three months, flat from November (11.6%).  Only 4.5% plan to sell, also stable compared to last month.

 

It seems as through drivers still don’t believe prices at the pump…with the average price for gas hovering around $1.68/gal (per AAA), we’re reaching levels not seen since 2004, though 74.8% of consumers contend that pump prices have made an indelible impression on their budgets.  In addition to coping by taking fewer shopping trips (44.0%) and shopping closer to home (40.6%), we’ve seen 20%+ increases from December ’07 in drivers buying more store brand/generic products, shopping for sales more often and using coupons:

 

 

The relative – dare we say it? – stabilization of ≤$2/gal gas has consumers less pessimistic about the future direction of pump prices compared to a month ago…while about half (49.5%) contend that gas prices will remain the “same” through the New Year, fewer than on in five (18.7%) assert the prices will increase, lowering from the 29.6% who felt the same last month about the direction headed toward Christmastime.  One in three (31.8%) portend that gas prices will continue to lower.  Consumers estimate that we will ring in 2009 at prices averaging $2.09/gal, $0.50+ lower than the average price expected at Christmas.

 

Gas prices are still proving to be worrisome, but with temperatures dropping, consumers are adopting green methods to cope with rising energy costs related to home heating…58.1% report they are simply dialing down their thermostats to reduce consumption, 49.0% are bundling up in the house, while 25.9% are using more energy-efficient lighting.

  

 

With retailers and shoppers increasingly placing emphasis on Cyber Monday, where might have consumers surfed on this extension of Black Friday shopping?  For apparel items, 4.2% report they browse eBay.com most often, followed by WalMart.com (3.9%), JCPenney.com (3.8%), Amazon.com (3.5%), and Kohls.com (3.5%)…for Non-Apparel, Amazon.com (15.3%) tops the list, followed by WalMart.com (6.7%), eBay.com (6.7%), BestBuy.com (6.3%), and Target.com (2.1%).  49.8% and 42.2% report “No Preference” for particular Apparel and Non-Apparel sites, respectively, demonstrating the ease of shopping one site over another with just the click of a mouse. 

 

2008 introduced retailers to the “Recessionista” – the shopper who says it’s chic to be cheap, and during a holiday season where the buyer has the upper hand, it should come as no surprise that more than one in four (25.6%) report they only buy clothing on sale, rising more than five points from a year ago (20.8%) and setting a new high.  The majority (61.9%) still say they usually buy clothing on sale, while 12.4% indicate that sales aren’t important.

 

Armed with this info, it should come as no surprise that discounters – and discounting department stores – lead the way in Women’s Clothing…Wal-Mart tops the pack with 11.6% shopping there most often.  Kohl’s is close behind with 9.0% (gaining from 8.4% last year), while Macy’s (6.0%), JC Penney (6.0%), and Target (2.7%) round out the Top 5.

 

Wal-Mart’s lead is even stronger in the Men’s section…the big discounter leads with 14.8% headed there most often, while Kohl’s (9.0%), JC Penney (7.5%), Macy’s (5.2%), and Sears & Target (tied, with 2.6% each) follow.

 

Over in Children’s apparel, the big W maintains a big lead over the competition…Wal-Mart leads here with 14.7% shopping there most often, nearly three times the shoppers of its closest competitor, Target (5.2%).  Kohl’s (5.1%), JC Penney (3.0%), and Old Navy & Gap (tied, with 1.8% each) complete the Top 5.

 

Payless had the upper hand last month in Shoes, but Wal-Mart reverses the results in December…10.2% report they trek to the big discounter most often for footwear, leading the discount specialty (8.6%) by 1.6 points.  Kohl’s (5.5%) is fairly hot on Payless’ heels, while DSW (3.3%) and JC Penney (3.2%) follow.

 

Santa soon arrives for good little boys and girls, so where are his elves likely headed for the must-have toys and games?  You betcha, more than one in five (21.6%) shop discounter Wal-Mart most often for Children’s Toys, followed by big box specialty Toy R Us (14.1%).  Target (7.0%), Amazon (1.4%), and KB Toys (1.1%) round out the Top 5.  One in two (49.1%) Toy shoppers buy at a particular store based on price, while selection (37.4%) and location (27.3%) follow in importance.

 

With talk of the Toy Wars a perennial favorite around the holidays, how stable is Wal-Mart’s lead over Geoffrey and crew at Toys R Us?  According to this month’s Consumer Migration Index (CMI), which tracks those who have immigrated to a store (new customers within the past year) against those who have emigrated (left within the past year), and where a positive rating spells net growth to a retailer, the big W has continued to build its customer base with a +2.2 rating, while Toy R Us, suffering a customer deficit with a -6.2 rating, might continue to fall behind:

 

 

Overall, migrating shoppers indicated that high prices (19.4%) and inconvenient location (12.1%) were the major incentives to shop elsewhere…specifically, though, former Toys R Us customers were particularly likely to cite long checkout lines (13.1%), decline in store appearance (11.7%), and poor customer service (10.0%) in addition to price (35.2%) and location (33.0%).

 

And now onto toys for those big girls and boys…Electronics.  With almost one in three (29.8%) consumers shopping there most often, Best Buy remains tops in this category, followed by Wal-Mart (17.0%) and an ailing Circuit City (5.8%).  Amazon.com cracks the Top 5 for the first time with 2.3%, while Target (2.1%) follows.

 

Amazon.com is shaking up the competition in Electronics, and BIGresearch Retail Ratings Reports subscribers have the inside track on this online retailer’s customer base.  Here’s a sample of our latest report, so you can get in the know: www.bigresearch.com/big-cias-rrr-nov08-electronics.pdf.

 

To learn more about the Retail Ratings Reports (available for 12 major categories), call 1-800-800-4462 or visit us on the web at www.BIGresearch.com.

 

Although grocers (53.8%) are shopped more often for Groceries than discounters (19.7%) overall, that one big discounter with national presence maintains a strong lead in the foodstuffs section…Wal-Mart (16.4%) holds more than twice the customer share than that of nearest competitor Kroger (6.6%).  Publix (3.8%), Safeway (2.8%), and Shoprite & Meijer (tied, with 2.3% each) round out the Top 5.  Though segment the results by region, and you’ll see that seemingly small grocery players still hold their own corner of the market:

 

With more than triple the share of its nearest competitor in Health & Beauty Care, Wal-Mart’s lead is safe and sound in this category as well headed into 2009: 1. Wal-Mart (28.4%), 2. CVS (8.8%), 3. Walgreens (8.0%), 4. Target (6.5%), 5. Rite Aid (3.0%).

 

The druggists close the year with a secure lead in Prescription Drugs…Walgreens (15.1%) and CVS (13.3%) remain the top stores shopped for cures for the Rx-medicated colds, while Wal-Mart (9.8%), Rite Aid (5.2%), and Target (2.1%) complete the Top 5.
 

 

We saw an uptick in November, but this month's 90 Day Outlook doesn’t forecast similar good tidings for retailers, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more).  It appears that consumers are peering into the New Year and after the requisite holiday shopping has been completed, look for consumers to put the pinch on spending:

Retail Merchandise Categories - 90 Day Outlook

(December 08 compared to November 08 and December 07)

While recession-riddled consumers aren’t portending the best entry into 2009, some retailers can hold out hope for the few bright spots found in six month high-dollar purchase intentions…it seems consumers are still willing to invest in home and family time, as purchase intentions for TVs (12.0%), digital cameras (6.5%), and vacation travel (13.3%) rise from ’07.  Computer, stereo equipment, and home improvements remain relatively flat, while autos, jewelry, furniture, appliances, and DVD/VCR decline from a year ago.

 

ON THE LIGHTER SIDE...What's Hot and What's Not 

 

One-click shopping hits the spot this month with harried consumers, as 83.5% contend that holiday shopping online is what’s hot this month…two of the hottest gift items follow: Nintendo Wii (72.4%) and Blu-Ray Players (61.7%).  The fairer gender also sports a soft spot for Twilight, while men – big surprise – maintain their stance on last-minute gift buying.  What’s Not?  Fake or for real, fur coats just aren’t flying with consumers.

 

 

Sincerely,


                                                                 

 

 

Editor

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