BIG Executive Briefing
Economic & Consumer Insights for Marketing Executives

BIGresearch's Consumer Intentions & Actions Survey monitors over 8,000 consumers each month
providing unique insights & identifying opportunities in a fragmented and transitory marketplace
January 2005 (Respondents surveyed 1/5 - 1/12/05)


Talking Points:

  • Consumers ring in the New Year with slightly more confidence than they had at the end of 2004
  • Fewer consumers ‘fess up to practicality this month
  • Consumers start ’05 with high hopes for U.S. employment outlook
  • Well-intentioned consumers may have resolved to become more conservative with their finances in ’05, but how many will follow through? 
  • Wal-Mart starts the New Year off with a bang, still at the top in Women’s and Men’s Clothing.
  • After (narrowly) fending off Wal-Mart’s advances in Shoes during 2004, has Payless fallen to the AR-based discounting behemoth? 
  • Walgreens may currently have the lock on the #1 in Prescription Drugs, but is on shaky ground when it comes to HBC
  • Good news for automakers…6-month purchase intentions up this month
  • Consumers confirm what we thought all along…BIGresearch is what’s hot this month!  


 ECONOMY


Consumers ring in the New Year with slightly more confidence than they had at the end of 2004…those very confident/confident in chances for a strong economy up almost a point in January to 48.8% from 48.1% last month…also down two points from a year ago (50.8%), but up a strong 12 points from the start of ’03.

 

With Bush’s second inauguration just days away, how are consumers dealing with political/national security issues?  It looks like the President may be off to a good start, as concern is down from 23.4% last month to 18.4%, the lowest reading since February ’04.

 

We told you so…refer back to your Nov-04 Briefing and you’ll find that we reported that a decline in year-over-year practicality meant that “consumers may be more willing to let loose and spent this [holiday season].”  With the NRF reporting a 5.7% rise in holiday sales over 2003 (the strongest holiday growth since 1999), it looks like we were right AGAIN.  What's going on with consumers this month?  In January, 38.2% of consumers 'fessed up to becoming more practical in the last 6 months, down from 43.6% last month, and the lowest reading since September ’02.

 

And, it looks like deep post-holiday discounting and gift cards burning holes in consumers’ pockets have more of our less-practical consumers forgoing needs in favor of wants this month...those who value needs over wants in purchasing falls to 44.4% this month from December’s 51.0%, a new low.

 PERSONAL/FINANCIAL


Consumers start ’05 with high hopes for U.S. employment outlook…those who say there’ll be “more” layoffs in the next 6 months down over 4 points from December (31.3%) to 27.0%, “same” increase to 53.2% (v. 50.3% in December), “fewer” increases to 19.8% (v. 18.5%).  Personal concerns with becoming laid off also down slightly to 5.3% from 5.8% last month.

 

Well-intentioned consumers may have resolved to become more conservative with their finances in ’05, but how many will follow through with their resolutions?  Planning to “pay down debt” increases this month to 44.3%, compared to 42.5% last month and 43.9% one year ago.  However, while consumers planning to increase savings is on the rise (31.7%, compared to last month’s 30.4%, when savings took a backseat to holiday spending), fewer are making this a financial priority in ’05 versus the start of ’04 (35.7%).  Further evidence that less-practical consumers are showing their colors…credit cards may be getting a workout, as shoppers planning to “pay with cash more often” hit a new low in ’05, while “decrease overall spending” also declines this month.

 

As the refinancing boom slows, those planning to refinance their home relatively flat at 2.5% from 2.8% in December and down over a point from last year (3.6%).  And those consumers with home mortgages…who are they?  Compared to the average consumer, those with a fixed mortgage are slightly older and also earn higher average yearly incomes, while those with variable tend to be younger, but earn higher yearly incomes than average as well as those with a fixed mortgage.

Investor confidence in the stock market is up slightly from December 2004 ...those who would definitely/probably invest up slightly from 61.8% last month to 63.6%.  Investors planning to buy stocks relatively flat at 13.5% from December's 13.8%, while those planning to sell down over half a point to 7.2%.

Holiday shopping deadlines and highly anticipated movies hitting theaters in December enticed more consumers to open their wallets...shoppers were less likely to defer purchases last month in every major category: apparel, going out to eat, vacation travel, home improvement projects, entertainment, autos, and electronics.

 RETAIL


Wal-Mart starts the New Year off with a bang, as the discounter remains at the top in Women’s and Men’s Clothing for the month of January.  In Women’s, Sears flip-flops with merger partner Kmart to land at #5, while the rest of the Top 5 remains the same: 1. Wal-Mart, 2. JC Penney, 3. Kohl’s, 4. Target, 5. Sears.  However in Men’s, Sears is displaced one notch to #4 (December rank in parenthesis): 1. Wal-Mart (1), 2. JC Penney (2), 3. Kohl’s (4), 4. Sears (3), 5. (tie) Kmart (6) & Old Navy (7).

 

After (narrowly) fending off Wal-Mart’s advances in Shoes during 2004, has Payless fallen to the AR-based discounting behemoth?  For the second consecutive month, Wal-Mart leads the discount specialty retailer for the store shopped most often for Shoes (share % in parenthesis):1. Wal-Mart (16.7%), 2. Payless (15.0%), 3. Kmart (3.3%), 4. Kohl’s (3.1%), 5. JC Penney (2.5%).

 

After Wal-Mart jeopardized CVS’s #2 spot in Prescription Drugs for a few months in ’04, has the drug store chain finally stepped up the competition?  Most likely thanks in part to its unique “ExtraCare” card program, CVS has managed to hang on to it’s second position (10.5% shop there most often), behind Walgreens (12.7%) but ahead of Wal-Mart (9.1%), Rite Aid (4.4%), and Eckerd (2.6%).  But it’s not all about frequent shopper cards…consumers cited location (63.2%) as the #1 reason to shop a particular store for Prescription Drugs.  Insurance coverage (40.5%), phone-in prescriptions (38.6%), price (36.1%), and a pharmacist who provides valuable information (20.2%) follow.

 

CVS isn’t out of the woods yet…this month, we’re taking a deeper look at the Prescription Drug section through the Consumer Migration Index (CMI), which tracks those who have immigrated to a store (the new customers within the past year) against those who have emigrated (left within the past year) and where a positive rating (new customers outnumber those who have left) spells net growth to a retailer.  And, with the store with the most new customers and the fewest exiting customers, Wal-Mart proves that prolific locations, EDLP, and that big yellow smiley face are a winning combination.  The discounter scores a +7.7 rating, compared to the +4.2 and +2.4 ratings of its drugstore rivals of Walgreens and CVS (respectively), while Rite Aid and Eckerd provide zero competition:

 


And the Top 3 reasons why consumers took a walk from their former Prescription Drug store?  Inconvenient location (25.1%), high prices (20.5%), and poor customer service (13.7%).

 

Walgreens may currently have the lock on the #1 in Prescription Drugs, but this big W’s on shaky ground when it comes to Health and Beauty Care…this month, CVS pulled ahead of Walgreens to claim the #2 spot behind (who else?) Wal-Mart.  The complete Top 5 (share % in parenthesis): 1. Wal-Mart (35.1%), 2. CVS (6.0%), 3. Walgreens (5.7%), 4. Target (5.2%), 5. Rite Aid (2.5%).

 

How’d CVS pull it off?  According to the Consumer Equity Index, our year-over-year index which shows growth or decline in a store’s share (an index of 100 is flat, while an index of 105 indicates 5% growth), this month in HBC Wal-Mart’s growth has flat-lined over the past year (CEI=99.91), CVS has experienced 12% growth (CEI=112.36), while Walgreens saw a 12% decline (CEI=87.93).  Insight special: Walgreens is particularly losing it’s male and under $50,000 customers, while CVS has been capitalizing on men and those earning over $50,000.  Check out the chart below for a CEI visual of the Top 8:

 

 

This info’s pretty clever, huh?  This is just a taste from our monthly Retail Ratings Report, available for 10 major categories.

 

And just in case you were curious…Wal-Mart still leads in Groceries this month with 15.7% who say they shop there most often.  Kroger (6.4%), Albertsons (3.5%), Safeway (3.3%), and Publix (2.9%) follow.

FUTURE PURCHASES


Good news for automakers…6-month purchase intentions up this month for automotives, compared to December.  And with gas prices on a slight decline, it appears that consumers in the market for a vehicle are more willing to check out gas-guzzling SUVs and cross-overs (the car-based SUVs) than they were last month…cars on a slight decline.

 

However, it seems the good news may end there…most major purchases are off this month (compared to December) as consumers turn their attention to paying off their holiday shopping bills.  Computers, furniture, home appliances, jewelry/watch, stereo equipment, TV, VCR/DVD, and digital camera down…house and major home improvement/repair down slightly.  Vacation travel is up, as chilled consumers likely looking for warmth down south.

 

It appears that consumers plan to concentrate on the insides of their homes during the winter months, as the 90 Day Outlook for linens/bedding, home improvement, home décor, and home furniture up this month, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who’ll spend more).  For those in warmer climates, it looks like they’ve focused on tending to the outdoors as well…lawn & garden is also up:

 

Retail Merchandise Categories - 90 Day Outlook

(January 05 compared to December 04 and January 04)

Category December 04 January 04 Category December 04 January 04
Children's DOWN UP Toys and Games DOWN UP
Women's Dress DOWN FLAT CDs/DVDs/Videos/Books DOWN DOWN slightly

Women's Casual

 DOWN slightly FLAT Electronics DOWN DOWN
Men's Dress DOWN UP Groceries DOWN slightly DOWN
Men's Casual DOWN FLAT Home Improvement UP DOWN
Shoes FLAT UP Lawn & Garden UP DOWN
HBC UP FLAT Home Furniture UP DOWN
Dining Out DOWN slightly DOWN Decorative Home Furnishings UP FLAT
Sporting Goods UP UP Linens/Bedding/Draperies UP UP


 

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


Consumers confirm what we thought all along…BIGresearch is what’s hot this month!  Video email and eccentric actor Johnny Depp follow.  Depp, although is 40+, is still making temperatures rise among those 18-34…he’s #2 with this group, behind BIGr.  Video email, Disney character accessories, and Anime round out the Top 5.  BIGr is also #1 with our 35+ fans…Video email, Disney characters, Electric scooters, and Depp also hot-hot-hot with this crowd.  And, no need to refrigerate Pepsi Holiday Spice…the limited edition soft drink is keeping pretty cool on its own.


 

Sincerely,

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Editor

Special for BIG Briefing Members...Be the first to meet the customers!  BIGresearch has teamed with T. Scott Gross to write When Customers Talk, a book is based on the insights of 100,000 retail customers presenting their valuable feedback on service, pricing, habits, and what they look for in a shopping experience.  When Customers Talk is available through your favorite bookstores, or you can check it out at on the web: www.whencustomerstalk.com.
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