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


June 2009 (Respondents surveyed 6/2 - 6/9/09)

Talking Points:

§  Consumer confidence down a point from May, still well above ‘08

§  Practicality still on the rise among budget-conscious consumers

§  Two in five predict “more” layoffs, flat from last month

§  Is the recession hailing a new generation of savers?

§  Amazon.com v. Walmart.com…websites shopped most often

§  Men’s Clothing: Nordstrom, L.L.Bean, Lands’ End shoppers value service

§  90 Day Outlook: Rises from ‘08, mixed compared to May

§  What’s Hot? Day tripping and other outdoor activities…


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Economy


Although the unemployment rate reached a 25+ year high in May, consumers are still relatively hopeful for our economic future…in June, 30.2% contend they are confident/very confident in chances for a strong economy over the next six months, down a point from last month (31.2%), but still substantially higher than a year ago (18.8%).

 

Perhaps the steadily climbing DJIA has a little something to do with inflated confidence readings…two in five (41.3%) say the stock market accurately reflects the strength of the economy.

 

With the H1N1 virus making fewer headlines lately, all’s fairly calm on the homefront…this month, one in five (21.0%) continues to worry about political and national security issues, flat from May (21.2%) and lowering two points from June ’08 (23.3%).

 

It doesn’t appear that retailers should plan for a stellar summer selling season…cautious consumers still aren’t ready to buy as nearly half (47.8%) remain resolute about becoming more practical when purchasing, rising slightly from the month before (47.4%) and trending ahead of June ’08 (45.4%).

 

Furthering that point…while fewer consumers report they are focused on just the necessities when purchasing (55.0%) compared to May (56.9%), this figure is on the rise from 53.6% one year ago, back when we were coping with $4+/gal gas prices.


 

Personal/Financial


While the U.S. government is reporting that nearly one in ten consumers is out of work, citizens are taking a more rose-colored view, particularly compared to ‘08…in June, 43.3% of consumers contend that there will be “more” layoffs over the next six months, flat with May, but declining nearly 20 points from last year (61.6%). Almost as many predict the “same” (39.7% v. 31.4% in June ’08), while about one in five (17.0%) hope for “fewer,” up ten points from last year (7.0%). Fewer than one in ten (7.6%) continue to fear the pink slip themselves, lowering from 8.1% in May and the lowest reading since October ’08 (7.5%).

 

It appears that cautious consumers intend to emerge from the recession on more stable financial ground…compared to a year ago, more are planning to pay down debt (32.1%), increase savings (25.2%), and pay with cash more often (22.2%). Perhaps because they’ve contracted their spending so much already, “decrease overall spending” (30.0%) is the only plan to decline from a year ago.

 

Has the turmoil witnessed during this recession really taught consumers a long-lasting fiscal lesson? A whopping 37.0% of consumers in June admit they haven’t saved any of their income in the past 12 months, while one in five (22.0%) discloses saving more than 10%, so one can only hope. At the very least, younger generations appear to be vigilant about feeding their piggy banks…three in five of those 18-24 (58.5%) plan to save “more” than they did last year, compared to just one in four 45-54 year olds (27.6%), who just may not be in the financial position to do so:

 

With the DJIA remaining rooted in the 8K range over the past 30 days, investor confidence remains stable as well…in June, nearly half of investors (48.0%) say they would definitely/probably gamble on Wall Street, compared to May’s 47.6%. One in ten investors (9.7%) plan to buy stocks in the next three months, while 4.3% intend to sell, both figures relatively unchanged from last month.

 

While the summer driving season has pump prices inching upwards, the relative “affordability” compared to last year’s budget-busting $4+/gal price tag has fewer drivers feeling the pinch…in June, one in four (24.3%) report that gas prices are not having a major impact on spending, 11 points higher than the 14.0% who said the same last year. However, among the three in four who are still affected, popular means for budgeting include driving less (41.1%), reducing dining out (39.0%), decreasing vacation/travel (36.7%), as well as spending less on apparel (33.9%).

 

Realistic drivers are anticipating the end of the halcyon days of $2/gal gas…more than four in five consumers (85.3%) expect gas prices to rise by July 4th, while 12.3% indicate they’ll remain stable…a meager 2.4% hope for a decline. Consumers expect the average price at the pump to reach $3.07 for Independence Day, 20% higher than the $2.54 predicted for Father’s Day.


 

Retail


With consumers continuing to hit the ‘net to save gas, time, and money, which storefronts are they surfing to most often? For non-apparel, it’s online-exclusive Amazon.com (15.1%), followed by Walmart.com (7.5%), eBay.com (6.3%), BestBuy.com (6.3%), and Target.com (2.1%). For apparel, the big discounter takes the top prize…4.9% click to Walmart.com most often, followed by eBay.com (4.0%), JCPenney.com (3.9%), Amazon.com (3.6%), and Kohls.com (3.0%).

 

When addressing Women’s Clothing specifically for the top click or mortar shops, consumers choose Walmart as their top stop…13.0% shop the discounter most often, flat from 12.9% one year ago. Kohl’s (9.5%) remains relatively close in second position (rising from 8.7% a year ago), while JC Penney (6.8%), Macy’s (4.9%), and Target (2.7%) round out the top 5.

 

Walmart packs a bigger competitive punch in the Men’s section, rising from 16.1% shopping there most often last year to a current 17.1%, while Kohl’s (9.1%) and JC Penney (9.0%) are battling for second place…Macy’s (5.6%) and Target (3.7%) follow.

 

While Kohl’s and JC Penney are close Men’s competitors currently, which department store is likely to come out ahead in coming months? 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, shows that JC Penney is facing customer deficit with a -2.4 CMI, placing Kohl’s in a better long-term position.

 

Consumers make price (68.7%) the leading reason to head to a particular store for Men’s Clothing most often…selection (54.1%), quality (43.8%), location (41.4%), and in-store experience (14.6%) also rate with shoppers overall. However, reasoning can vary by store…Nordstrom, L.L.Bean, and Lands’ End shoppers place a premium on service when buying Men’s Apparel (which should come as no surprise, as these stores are perennial favorites in the NRF Foundation/American Express Customers’ Choice Survey). Meanwhile, newest styles are key to American Eagle shoppers, while price is powerful at Walmart, Kohl’s, and Target:

 

Continuing into Footwear, we see some familiar tread…Walmart continues to lead rival Payless in Shoes with 11.8% shopping the big discounter most often versus 10.4% for the discount specialty. Kohl’s (4.5%) is third, while JC Penney (2.9%) and DSW (2.5%) round out the top 5.

 

A big box and a big discounter dominate in Electronics…one in two consumers shops either Best Buy (30.9%) or Walmart (21.1%) most often for the latest in high-tech, both increasing share over the past 12 months. Target (2.5%), Sears (2.1%), and Amazon.com (1.9%) follow not-so-closely behind.

 

Bargain hunters are abound, so it should come as no surprise that the Bentonville behemoth maintains the lead in Sporting Goods…with 14.5% shopping there most often, Walmart edges Dick’s (10.2%) for all things outdoor-oriented, court-centric, and sweat-saturated. Sports Authority (4.2%), Big 5 (2.7%), and Academy (2.3%) are left to play pick-up.

 

With about triple the share of its nearest competitor, Walmart has the Grocery aisle in the bag this June…17.2% shop the discounter most often for foodstuffs, while Kroger (6.2%), Publix (3.8%), Safeway (2.5%), and Meijer (2.2%) complete the top 5.

 

Same story, wider margin in Health & Beauty Care…nearly one in three (29.5%) shop Walmart most often for shampoos and soaps, three times the share of druggists CVS (8.7%) and Walgreens (8.2%). Target (6.3%) and Rite Aid (2.5%) follow.

 

While the top three retailers in Prescription Drugs have remained unchanged from last year, shares for each of these Rx shops have grown over the past 12 months, signaling tough competition for smaller players in this category. The complete top 5: 1. Walgreens 15.7%, 2. CVS 14.0%, 3. Walmart 11.2%, 4. Rite Aid 4.6%, 5. Target 1.9%.

 

Where has major growth occurred for the “big 3” in Prescriptions? According to the Retail Ratings Report for May, while Walgreens and Walmart are fairing particularly well among men, CVS has received a boost from women as well as those with incomes exceeding $50,000. Take a page from the pros here: www.bigresearch.com/big-cias-rrr-may09-drugs.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.

Future Purchases


Improvements from June ’08 – notably, rising consumer confidence and lowering pump prices – have helped consumers paint a brighter picture for the 90 Day Outlook versus a year ago, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more). However, practical and budget-conscious consumers forecast mixed spending improvements compared to May:


Retail Merchandise Categories - 90 Day Outlook

(Jun-09 compared to May-09 and Jun-08)

Are the fire sales at GM and Chrysler dealerships fueling purchase intentions for autos? This month, one in ten consumers (10.2%) intends to buy an auto in the next six months, up a point from May (9.1%) and edging upward from a year ago as well (9.7%). In June, six month purchase intentions were down compared to last month for furniture, home appliances, and digital cameras…DVD/VCR and jewelry were down slightly, while housing, major home improvements, TV, and vacation travel remained flat. Computers and RV/boat rose slightly.


  

What’s Hot…Not


Consumers (81.6% of them) looking to trim their vacation budgets while indulging in a little summer fun name day trips as what’s hot in June…outdoor entertainment was a hot topic as well, with beach vacations (66.4%), camping (64.8%), and backyard firepits (63.6%) also rating highly. Twitter is all the rage among those 35+ (hmm…have the younger, trendier crowds moved on already?!), while young men are all about Conan O’Brien and Megan Fox, likely for vastly different reasons. What’s Not? Hawaiian shirts…keep those lei-ing in the bottom of your dresser drawer this season.


 

Sincerely,

                                                                 

 Editor

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