BIG Executive Briefing
Economic & Consumer Insights for Marketing Executives

 

January 2009 (Respondents surveyed 1/1 - 1/9/09)

Talking Points:

§     One in four confident in economy at start of ‘09

§     Practicality, needs over wants reach new highs

§     One in ten fears becoming laid off

§     Record high plan to decrease overall spending

§     Shoe Wars: Payless edges Wal-Mart

§     Sports battle brewing? Wal-Mart v. Dick’s

§     CMI: Prescription Drugs

§     90 Day Outlook falters from January ‘08

§     What’s Hot? Is it safe to switch to cubic zirconia in a recession?
 

Notice: The video briefing is also now available on Blip.TV and YouTube!

 

Consumers ring in 2009 with relatively renewed hope for the future of the economy…in January, 24.7% indicated they were confident/very confident in chances for a strong economy, rising from last month’s dismal 20.0% and the highest reading since September ’08 (28.3%).  The recession has taken its toll, though…this month’s figure is almost ten points lower than a year ago (33.5%) and less than half of the January ’07 reading (50.5%).

 

 

 

While we’ll witness a changing of the guard on Pennsylvania Avenue this month, it appears that this transition - coupled with continued unrest overseas - has heightened consumers’ concerns regarding political and national security issues…26.7% continue to worry, up almost two points from December (25.0%) and rising nearly nine points from a year ago (17.9%).

 

Retailers hoping for recovery following a dismal holiday season had better heed consumers’ New Year’s resolution: become more practical…with holiday bills rolling in and the recession on the minds of all, more than one in two shoppers (57.3%) say they've become more practical/realistic in spending, up from 49.8% last month, 41.2% from January ’08, and a new high.  Focused on the household economy, more than one in two (53.4%) also indicate they’ve become more budget-conscious, rising from 39.0% from last year.

 

With the holidays behind us, retailers had better prepare for shoppers making lists and checking them twice sticking to them…two in three (66.0%) contend they’re more focused on needs over wants in spending, up almost 10 points from one month ago (56.5%), also a new high.

 

 

While U.S. unemployment inched upward to 7.2% in December, consumers’ unemployment prognostications became slightly more optimistic this month, perhaps because of the change due on Capitol Hill… three in five (59.9%) still contend there will be “more” layoffs in the next six months, though lowering from 66.4% in December ’08.  One in three (30.5%) are expecting layoff levels to remain the same (compared to 25.9% last month), while one in ten (9.6%) are hopeful for fewer (v. 7.7%).  Reaching a new high, however, are personal concerns about becoming laid off…one in ten (9.6%) fear the pink slip this month, rising almost a point from December (8.4%) and up from 5.2% one year ago.

 

While many likely made a physical fitness resolution in ‘09, it appears that record numbers are vowing to fatten their banks accounts…while the financial priority is paying down debt (44.4% intend to do so, the highest reading in more than 5 years), more than two in five (42.9%) are planning to decrease overall spending, rising from 33.7% a year ago and a new high.  Shoppers are also vowing to lay off the credit, as 30.5% insist they’ll pay with cash more often, up from 23.0% in January ’08 and a five year high, while one in three (33.5%) plans to increase saving, rising from 28.3% a year ago:

 

 

Opportunity is knocking a little louder for deal-seeking bulls on Wall Street…this month, 47.4% of investors contend they will definitely/probably gamble on the stock market, up from 44.0% last month.  More than one in ten (12.1%) investors indicate they’ll buy stocks in the next three months, rising half a point from December (11.5%), while those planning to sell (3.9%) lower from 4.5% a month ago.

 

With gas prices almost half of what they were in January ‘08, a slightly increasing number of consumers (30.0%) say pump prices are having no major impact on their spending compared to a year ago (25.5%).  However, among the 70.0% who remain affected, lower prices at the pump have yet to give them cause to forgo their bargain-hunting habits…while close to half (48.9%) are cutting back by simply taking fewer shopping trips, scouting sales, clipping coupons, and buying store brands remain popular methods for making the most of household budgets:

  

While consumers received the gift of lower pump prices in December, the slight uptick at the turn of the year has an increasing number of consumers concerned that <$2/gas will be short-term…nearly one in two (45.3%) contends that pump prices will increase through Valentine’s Day, rising from the 18.7% who felt the same about the direction at New Year’s.  45.8% say the cost of fueling up will remain the same, while a meager 8.9% are holding out for a decrease.  Drivers estimate that pump prices will reach $2.18 by February 14, slightly higher than the $2.09 predicted on January 1.

 

 

While consumers plan to stick to their budgets in ’09, recessionistas have held firmly to the labels they love…just under half (46.9%) reveal that familiar fashion labels are important to them, rising more than two points from one year ago (44.4%).  However, with the vast majority of shoppers (87.0%) indicating they  “usually” or “only” buy clothing on sale, these fashionistas will likely scout for designer labels at discount prices (à la cheap chic retailers like Target and Kohl’s) or label-envious accessories rather than ensembles.

 

While discounters (19.2%) remain second to department stores (29.9%) regarding where consumers shop for Women’s Clothing, specifically speaking it appears that national presence and EDLP appeal continue to buoy Wal-Mart at the top, with 11.5% shopping there most often, up from 10.5% a year ago.  Kohl’s (8.7%), JC Penney (7.2%), and Macy’s (6.5%) also increased share year-over-year, while Target (2.4%), remaining flat, rounds out the top 5.

 

The Wal-Mart share also grew in the Men’s section versus January ’08…the big discounter leads this category with 14.7% shopping there most often (up from 13.5%).  Nearest competitors Kohl’s (9.4%), JC Penney (9.1%), and Macy’s (5.8%) also made 12 month gains, while Sears (2.9%) completes the top 5.

 

Over in Shoes, though, it’s Payless that begins ’09 on the right foot as the Shoes Wars continue into the New Year…this month, the discount specialty leads big discounter Wal-Mart with 10.8% shopping there most often to the big W’s 10.3%, reversing December’s results.  Kohl’s (4.9%), DSW (3.6%), and JC Penney (3.2%) follow.

 

Skipping from the softlines, Best Buy continues to be THE best bet for Electronics…while the popularity of video gaming systems and HDTVs continue despite the recession, more than one in three (34.3%) say they shop the big box most often, up from 30.8% a year ago (and perhaps winning converts from bankruptcy-mired Circuit City).  Wal-Mart follows with 18.4% (also rising from 16.1% in January ’08), while Circuit City (5.8%), Sears (2.5%), and Target (2.4%) round out the top 5.

 

It appears we’re gearing up for a big battle in Sporting Goods in ’09…#1 Wal-Mart currently leads this category with 12.4% shopping there most often, barely edging out big box Dick’s (12.3%) for the top spot.  Sports Authority (5.0%), Academy (3.1%), and Big 5 (2.7%) follow not-so-closely behind.  While Wal-Mart and Dick’s both increased their customer shares over the past year, it appears that Dick’s courted more favor with male shoppers, placing them neck-and-neck with top contender Wal-Mart.  Check out a page from our latest Retail Ratings Report for BIG insights: www.bigresearch.com/big-cias-rrr-dec08-sports.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.

 

Home Depot (32.2%) and Lowe’s (27.3%) continue to hammer the competition in Home Improvement/Hardware with both big boxes increasing share from 29.8% and 23.3% in January ’08, respectively.  Wal-Mart (5.5%) follows in distant third, while Menards (4.2%) and ACE (2.8%) complete the top 5.

 

Wal-Mart’s lead is in the bag for Groceries…18.4% shop the discounter most often for foodstuffs, more than double the share of nearest competitor Kroger (7.1%).  Publix (4.0%), Safeway (3.4%), and Meijer & Shoprite (tied, with 2.4% each) follow.

 

Health & Beauty continues to be Wal-Mart’s bread and butter into the New Year…one in three (33.3%) shops the discounter for cosmetics, shampoos, and the like, triple the share of nearest competitor Target (8.1%).  Druggists CVS (7.8%), Walgreens (7.5%), and Rite Aid (2.6%) complete the top 5.

 

With the majority (64.5%) indicating they purchase Prescription Drugs at a particular shop based on location, it should come as no surprise that the corner druggists continue to lead this category…consumers shop Walgreens (17.8%) and CVS (14.1%) most often for the cures to their prescription-medicated colds, while Wal-Mart finishes in not-so-distant third (11.7%).  Rite Aid (6.4%) and Target (2.5%) round out the top 5.  Price (41.6%), insurance coverage (36.7%), and phone-in convenience (32.7%) follow as top reasons to shop.

 

Though with more than one in ten (15.9%) shopping a particular store due to a [Wal-Mart-pioneered] $4 generic drug program, is it correct to assume Walgreens and CVS will remain on top well into the New Year?  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, expect Wal-Mart’s strength to grow in this category.  With a whopping +9.9 CMI, the big discounter built upon its customer base, while Walgreens (-2.7) and CVS (-0.5) suffered declines:

 

 

Attention druggists: practical, budget-bound shoppers who switched Rx stores in the past year did so primarily based on high prices (19.5%) and the lack of a $4 generic program (15.2%).  Inconvenient location (14.8%), poor customer service (11.8%), and inconvenient hours (7.4%) followed.
 

 

The recession, record practicality, and desires to stick to a tight budget appear to attribute to continued decline of the 90 Day Outlook, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more).  Seasonality seems to be boosting Home Improvement and Lawn/Garden Care from December, though all categories decline from January ’08:

Retail Merchandise Categories - 90 Day Outlook

(January 09 compared to December 08 and January 08)

The probability of a tax refund check and perhaps a few leftover holiday gift cards appear to be adding a silver lining to high dollar spending over the next six months…with the exception of digital cameras (decline) and autos (flat), purchase intentions for all major categories – computer, furniture, home appliances, house, jewelry/watch, major home improvement, stereo equipment, DVD/VCR, and vacation travel – have risen from December.  Adding to this much-needed good news: compared to a year ago, consumers are increasingly likely to spend on computers, appliances, jewelry, major home improvements, TVs, DVD/VCRs, and vacation travel, perhaps attributed to pent-up demand.

 

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

 

We wonder if they’ll feel the same next month, but in January, 81.3% indicated that physical exercise was what’s hot!  Younger men also backed the Apple iPhone and Jennifer Aniston (big surprise), while women cast their vote for the budget-friendly art of re-gifting as well as this season’s oversized scarves.  What's Not?  Even in a recession, when compared to cubic zirconia, diamonds are always a girl’s best friend.

 

 

Sincerely,


                                                                 

 

 

Editor

Check out our BIG Dashboard for big solutions...Business decision makers across the country are using BIGresearch intelligence to chart a successful course through uncertain times, proactively responding to marketplace volatility and gaining new insights into changing consumer attitudes.  The BIG Dashboard helps managers make informed decisions, more quickly and easily.  For a 30-day market trial, register at http://dashboard.bigresearch.com.

You are receiving this Executive Briefing as a service of BIGresearch. If this issue was forwarded to you and you would like to begin receiving a free copy of your own, please click here: SUBSCRIBE
If you'd rather not receive this Executive Briefing in the future, please reply to this e-mail and place the word UNSUBSCRIBE in the subject line.

BIGresearch, LLC. a Prosper Company

450 West Wilson Bridge Rd., Suite 370, Worthington, Ohio 43085

614-846-0146 • 614-846-0156 • BIGinfo@bigresearch.com

 

We welcome and appreciate the forwarding of our Executive Briefings in their entirety or in part with proper attribution.      (c) 2009, BIGresearch