While the official U.S. unemployment rate rose nearer to the 10% mark in April, consumers are still holding out for better days as far as the job market is concerned…in May, only one-quarter of consumers (25.9%) predict there will be “more” layoffs in the next six months, down substantially from the 43.6% who said the same one year ago. The majority of consumers (50.8%) contend that layoff levels will remain the “same,” increasing from May-09 (39.5%). More than one in five (23.3%) are hoping for “fewer” layoffs, rising from May-09 (17.0%) as well.

Personal concerns about becoming laid off also remain upbeat…only 3.6% fear the pink slip, down marginally from April (3.9%), but lowering more than 50% from a year ago (8.1%).

With practicality on a downturn, it shouldn’t be surprising that fewer are concerned with financial conservatism as well…in May, fewer than a third (30.4%) say they plan to pay down debt in the next 3 months, down from 33.1% one year ago. Just over a quarter (27.7%) intends to decrease overall spending, down nearly five points from May-09 (32.5%), while plans to increase savings (23.4%) also decline – though not as sharply – from a year ago (24.7%). One in five (19.9%) is attempting to pay with cash more often compared to May-09 (22.4%).

And, consumers might be withdrawing focus on their bank accounts because they have a better financial foothold this year compared to last…although two in five (38.8%) still indicate they are “worse off” financially compared to a year ago, this figure has declined from the near-majority (48.5%) who said the same back in May-09. Fifteen percent currently feel “better off” than a year ago, rising from the 12.4% recorded last year.

While the SEC is refuting reports of a fat finger trade on Wall Street, it appears that some investors may have been shaken by the May 6 market plummet (which occurred during collection of this survey)…this month, 49.1% of investors say they would definitely/probably gamble on the market, declining three points from April (52.4%), but remaining above the May-09 investor confidence reading (47.6%).

With pump prices expected to approach the $3/gal mark over the summer, what impact might this have on drivers? Among the nearly seven in ten (67.7%) who say that gas prices are influencing their spending, nearly two-fifths (37.3%) say they are simply driving less to defray costs. About a third (32.7%) are focused on reducing dining out, 31.5% are lowering their vacation/travel spending, 27.8% are cutting back on clothing, while 21.4% are delaying a major purchase, such as a TV, auto, or furniture.

Not surprisingly, seven in ten (71.4%) expect the cost of fueling up to rise by Father’s Day (June 20)…one quarter (25.9%) think gas prices will stay the same, while a meager 2.7% are watching for a decline. Consumers are expecting an average pump price of $3.19/gal, well above the average summer estimate predicted by the EIA ($2.94/gal).
 

Although few consumers are citing practicality compared to April, that doesn’t mean that shoppers don’t like a good bargain…in May, nearly one in four (23.3%) say they only buy clothing on sale, on par with last month’s 23.6%. The majority (63.4%) usually buys apparel on sale, up from 62.5% in April, while 13.3% claim that sales are not important, down slightly from 13.9% in the previous month.

Walmart continues to be the best bet for bargain-hunting Women’s Apparel shoppers…12.3% shop the ELDP purveyor most often, while Kohl’s (9.0%) is a relatively close second. Macy’s (6.3%), JC Penney (6.3%), and Target (2.5%) round out the top 5.

Walmart leads by a wider margin over in Men’s…here, 15.9% shop the big discounter most often, followed by Kohl’s (8.9%) and JC Penney (8.4%). Macy’s (5.7%) and Target (2.9%) complete the top 5.

Ahead in Children’s Clothing as well, Walmart completes the apparel trifecta…13.5% shop there most often, leading nearest competitor Kohl’s (4.6%) by nine points. Target (4.4%), JC Penney (3.2%), Macy’s (1.7%), and Old Navy (1.7%) follow.

While one in ten consumers shops Payless most often for Shoes, Walmart is still the leader in footwear…12.0% shop the Bentonville behemoth most often in this category, two points ahead of the discount specialty shop (10.0%). Kohl’s places third with 5.0%, while DSW (3.9%) and JC Penney (3.0%) round out the top 5.

However, a big box bests Walmart in Electronics…here, one in three (32.8%) shops Best Buy most often, leading second place Walmart (20.0%) by almost 13 points. Amazon (3.7%), Target (2.8%), and Sears (2.0%) continue to trail.

Walmart is a slam dunk, though, when it comes to Sporting Goods…14.3% shop the big discounter most often for athletic and exercise gear, ahead of big box Dick’s (10.9%). Sports Authority (4.4%), Big 5 (2.5%), and Academy (2.5%) round out the top 5.

Home Depot and Lowe’s continue to hammer the competition in Home Improvement/Hardware…the big boxes lead with 30.7% and 24.5% shopping there most often, respectively, while Walmart (6.8%), Menards (4.0%), and ACE Hardware (3.2%) follow not-so-closely behind. Price (64.2%), location (56.1%), and selection (53.3%) play key roles in determining where to shop, followed by quality (39.4%) and service (25.4%).

Though Home Depot currently maintains the larger consumer share, is Lowe’s positioning itself to ascend the throne in the near future? This month’s Consumer Migration Index (CMI) for Home Improvement/Hardware, 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 Lowe’s (with a +2.8 CMI, a customer conversion surplus) might be putting a little pressure on Home Depot, who is experiencing a customer deficit with a -5.8 CMI…Walmart and ACE Hardware are relatively flat:

Why might Home Depot be leaking customers? Collectively, shoppers of one year or less cited high prices (19.1%) as the main reason to stop shopping a particular store most often, followed by inconvenient location (16.7%), decline of store appearance (8.4%), poor customer service (7.2%), and lack of newest styles/products (6.4%).

With nearly triple the share of its closest competitor, Walmart continues to dominate the Grocery aisle…17.5% shop the big discounter most often, followed by traditional grocers Kroger (6.3%), Publix (3.4%), Safeway (2.9%), and Shoprite (2.3%).

Three in five (61.8%) contend they regularly or occasionally go Organic…what are the items most commonly found in their carts? Organic produce (50.5%), breads (29.0%), dairy (28.3%), cereals (27.8%), and juices (27.1%) are among the more popular products picked. And, Walmart (11.5%), Whole Foods (7.2%), Trader Joe’s (5.7%), Kroger (4.7%), and Publix (2.9%) are the stores shopped most often.

With about one in three shopping there most often for Health & Beauty Care, Walmart (30.6%) maintains a substantial lead over CVS (8.7%), Walgreens (8.2%), Target (6.8%), and Rite Aid (3.1%).

Druggists continue to corner the market on Prescription Drugs…with 17.1% and 15.8% shopping there most often, Walgreens and CVS, respectively, lead Walmart (11.7%), Rite Aid (6.6%), and Target (2.3%).
 

It appears that the slight decline in confidence this month may have contributed to the mixed 90 Day Outlook compared to April, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more). While most apparel categories declined from last month, all categories (with the exception of groceries) continue to improve from May-09 and May-08. However, all categories remain depressed compared to pre-recession May-07, evidence that spending is still on shaky ground:

Retail Merchandise Categories - 90 Day Outlook
(May-10 compared to Apr-10, May-09, and May-08)