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


March 2009 (Respondents surveyed 3/3 - 3/10/09)

Talking Points:

§  Confidence remains flat in March

§  One in two believe economy will rebound to previous level

§  Consumers more practical, focused on needs

§  90% plan to make long-term changes to spending habits

§  Savings plans are up this month

§  Look for Amazon, perhaps Costco to rise in Electronics

§  Consumer Migration: Linens/Bedding/Draperies

§  90 Day Outlook: Declines from last month, last year

§  What’s Hot?  Sports fans rally for Tiger Woods, March Madness


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


Economy


We’ve got good news and bad news regarding consumer confidence in March…The bad?  Fewer than one in five (19.5%) maintain they are confident/very confident in chances for a strong economy, down more than five points from a year ago (24.8%) and trailing the ’07 reading (46.9%) by 27+ points.  The “good”?  Confidence hasn’t slipped any further from last month’s dismal 19.4% reading…sorry to disappoint, but these days we’ve got to report the good news where we can find it.

While Obama delivered the State of the Union Address late last month, consumers weigh in on the state of the future economy…while almost half (49.7%) predict the economy will eventually rebound to previous levels of productivity, one in five (21.9%) believe not…one in three (28.4%) remains unsure.

With all remaining calm status quo on the homefront, consumers relax their concerns regarding political/national security issues in March…23.8% continue to worry, down one point from February (24.8%), though still a slight uptick from a year ago (22.3%).

With the economic and employment outlook continuing to look dim, shoppers are finding fewer reasons to get out and spend…more than half (52.7%) maintain they’ve become practical in purchasing in the last six months, up almost three points from last month (50.0%) and close to ten points from ’08 (43.6%).

Shoppers are increasingly rethinking some of their purchases before they head to check-out counters…close to three in five (58.1%) say they’re focused on needs over wants, up from last month (57.6%) as well as last year (51.0%).

While it’s obvious that consumers have put the pinch on spending during this recession, can we expect long-term changes to shoppers’ spending habits?  90.7% of consumers say yes…overall, it appears consumers will simply be more thoughtful when spending over the next five years, with the majority saying they will consider each purchase more carefully (55.2%) and/or become more price conscious (50.7%) when buying food or clothing.  Additional plans include sticking to a budget (48.1%), dining out less (46.3%), and vowing not to incur a large credit card debt (43.4%):

Think long-term changes are isolated to those earning smaller paycheck?  Think again…more than eight in ten (83.1%) of those earning $150K or more indicate the current economic crisis will impact their lifestyles over the next five years.  While upper incomers are just as likely to focus on carefully considered purchases, the $75K+ group remains more focused than average on cutting back on credit card and home equity debt as well as paying off charge card balances each month...those earning under $75K have a higher proclivity toward spending less on entertainment purchases.


 

Personal/Financial


While the U.S. unemployment rate rose to a 25 year high in February, consumers are a bit less pessimistic about the employment environment in March…while almost three in five (58.2%) contend there will be “more” layoffs over the next six months, this figure has lowered more than three points from the previous month.  One in three (30.8%) indicate that layoff levels will remain the “same” (v. 28.6% in February), while 11.0% predict “fewer,” rising from 9.7% last month.  More “good” news…9.0% continue to worry about being handed a pink slip themselves, backing down from February’s 10.6%, but substantially higher versus a year ago (5.1%).

With a whopping four in five (78.8%) saying they’ve saved 0%-10% of their annual income in the past year, it should come as no surprise that cash-strapped, worried consumers are ramping up their efforts to feed their piggy banks in the months to come…while 36.1% and 33.6% are making paying down debt and decreasing overall spending, respectively, the top financial plans, fewer are planning to do so in the next three months compared to February.  Instead, almost one in three (28.9%) indicates they plan to increase savings, rising a point from a month ago (27.8%) and almost two points from ’08 (27.2%).  Those planning to pay with cash more often (23.1%) remains relatively flat from last month and last year.

While there are abundant bargains on Wall St. these days, fewer are planning to take the bait…in March, 37.8% of investors say they would definitely/probably take a chance on the stock market, down more than four points from February (42.0%).  Investors planning to buy stocks in the next three months remain relatively flat from February at 9.1%, as do those planning to sell (3.6%).

Q: Fewer Impacted by Fluctuating Gas Prices + Increasing Actions to Defray the Cost of Gas = ???
A: Changing Attitudes Toward the Value of a Dollar
While national average gas prices are hovering just under $2/gal, much lower than the $3.23/gal average last year (source: AAA), it appears that although they are shelling out less at each trip to the pump, consumers are becoming increasing conscious about how they allocate their dollars these days…as a result more are embracing coupons, scouting sales, price comparisons, and store brand products than they were a year ago:

Regarding gas prices to come, half (48.9%) predict prices at the pump will rise by the Tax Deadline…about the same (46.4%) contend that the cost of fueling will remain stable, while a minor 4.7% foresee a decline.  Drivers are expecting an average pump price of $2.39/gal on April 15, up slightly from the $2.28/gal anticipated on St. Patrick’s Day.
 

Retail


Buying on sale may be a great pick-me-up in a down economy, and it’s proving to be more of a priority when shopping for apparel…one in four (24.6%) indicate in March that they “only” buy clothing on sale, up six points from a year ago (18.6%), while only one in ten (11.4%) say that sales aren’t important, down from 15.3% last year.  The majority (64.0%) contends they “usually” head to the sale racks, down slightly from March ’08 (66.0%).

While Walmart is better known for its EDLP mantra than its sale racks, it appears that value pricing plays a key role in this economy at keeping the discounter tops in Women’s Clothing…Walmart leads here with 12.2% shopping most often (up slightly from 11.8% in ’08).  Kohl’s (9.2%) is a relatively close second, gaining from 7.5% a year ago, while third place JC Penney (6.8%) also posts an increase from ’08 (5.9%)…Macy’s (5.7%) and Target (2.6%) round out the Top 5.

Walmart has a stronger hold in the Men’s sector, though Kohl’s continues to court new customers in this department as well…the big W is ahead with 15.4% shopping there most often (up from 14.0% last year), while Kohl’s places second at 9.6%, increasing almost two points from ’08 (7.8%).  JC Penney is third with 8.7% (also gaining from a year ago), while Macy’s (5.5%) and Target (3.2%) complete the Top 5.

For the second consecutive month, Walmart has laced up the lead in Shoes…the discount king leads this category with 11.3% shopping there most often, just half a point ahead of discount specialty Payless (10.8%)…Kohl’s (5.7%), JC Penney (3.5%), and DSW (3.5%) follow.

Where is Walmart making significant strides in footwear?  According to the latest Retail Ratings Report for Shoes, the discounter is gaining among some of its core shoppers (those earning under $50K), while Payless is losing ground among this segment…click here for the insider’s view: www.bigresearch.com/big-cias-rrr-feb09-shoes.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.

Now that Circuit City has officially shuttered its stores, which Electronics retailer will seize to the opportunity to court the former big box’s former customers?  Best Buy and Walmart seem likely, with 34.9% and 20.3% shopping there most often, respectively (and both gaining from a year ago).  Target (2.8%) has moved into the very distant #3 position, followed by Sears (2.5%).  What remained of Circuit City held onto fifth place in March with 2.2%, but look for Amazon (2.0%) or Costco (1.7%) to rise to the occasion in coming months.

Though the book might not be completely closed on defunct Linens ‘n Things, this former big box has dropped out of sight for the Linens/Bedding/Draperies (LBD) sector, where one discounter and the remaining LBD big box continue to trump the competition…one in three shoppers heads most often to either Walmart (21.2%) or Bed Bath & Beyond (13.4%) for LBD needs, with both retailers increasing share from one year ago.  JC Penney (8.4%), Target (6.8%), and Kohl’s (4.1%) follow.  Not surprisingly, price is the overwhelming factor to shop a store for LBD most often (70.2% say so)…selection (46.6%), quality (39.6%), location (35.3%), and in-store experience (11.1%) follow.

Are Walmart and Bed Bath & Beyond poised to strengthen in the LBD category in the long term?  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, Bed Bath & Beyond and Target appear to be picking up remaining Linens ‘n Things converts with +3.5 and +4.2 CMI ratings, respectively, while Walmart’s LBD customer base has remained stable:

Besides the obvious reason to stop shopping a LBD store – the going out of business sign – what else had customers of one year or less headed to an alternate location?  Primary culprits include high prices (24.7%), inconvenient location (12.1%), poor selection (9.5%), decline of store appearance (6.3%), and lack of newest styles (6.1%).

With almost triple the customer share of its nearest competitor, Walmart continues to prove it has the Midas touch in Groceries…with 17.0% shopping there most often, the big discounter leads grocers Kroger (6.2%), Publix (3.6%), and Safeway (2.6%), while Meijer (2.5%) completes the Top 5.

It’s the same fable in Health & Beauty Care, though Walmart carries an even stronger lead here…with one in three (29.4%) shopping there most often, Walmart leads its relatively minor competitors concerning all things soap, shampoos, and cosmetics.  The complete Top 5: 1. Walmart (29.4%), 2. CVS (8.8%), 3. Walgreens (8.4%), 4. Target (6.5%), 5. Rite Aid (3.1%).

Though while Walmart maintains a strong presence in Prescription Drugs, consumers continue to head to two druggists most often for Rx cures…Walgreens (16.2%) and CVS (15.1%) lead this category, followed by Walmart (10.6%), Rite Aid (5.9%), and Target (2.3%).


Future Purchases


Although the Easter holiday generally gives consumers a reason to head to the stores for new spring apparel, it appears that practical shoppers are rethinking that tradition, as the outlook dims for apparel categories over the next 90 days, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more).  As the recession weighs heavily on consumers’ minds, with the exception of toys and seasonal favorite lawn/garden, all categories decline from last month and last year:

Retail Merchandise Categories - 90 Day Outlook

(Mar-09 compared to Feb-09 and Mar-08)

It doesn’t appear that potential tax rebate checks will spur consumers into spending on high-dollar durables…with fiscal prudence on their minds, save for major home improvements/repairs (which is flat), six month purchase intentions for all other categories, including autos, computers, furniture, appliances, jewelry, TVs, DVD/VCR, digital cameras, and vacation travel, decline from March ’08.
 

What’s Hot…Not


Tiger Woods’ return to tournament play proves to be eagerly awaited…the golf phenom tops our list of what’s hot in March, while March Madness and American Idol also continue to be ratings winners among households.  The Flip Video Camcorder is a hit among the younger set, while those in the [slightly] older crowd are cashing in by selling gold jewelry.  And, statement necklaces are THE spring accessory among women.  What’s Not?  Ed Hardy…we hardly knew ye.  
 

Sincerely,

                                                                 

 Editor

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