BIG Executive Briefing
Economic & Consumer Insights for Marketing Executives

 

November 2008 (Respondents surveyed 11/5 - 11/11/08)

Talking Points:

§     Confidence rises slightly post-election

§     Practicality reaches peak November reading

§     Pessimistic personal concerns with becoming laid off

§     Financial plans ease from October, not ‘07

§     Christmas Day Gas Prediction: $2.64

§     2008: The Year of the Bargain Hunter

§     Shoe Wars Role Reversal: Payless back on top

§     90 Day Outlook: Spending plans perk up from October

§     TVs, digital cameras bright spots for high-dollar spending

§     What’s Hot?  Consumers advocating saving!

 

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

 

Current economic troubles have retailers bracing for a bleak holiday season, but some consumers are finding a slim silver lining post-election…22.3% are confident/very confident in chances for a strong economy, rising from 19.0% last month, but down a substantial 15 points from one year ago.  Those who voted for President-elect Obama indicate slightly higher confidence (26.6%), while those backing Senator McCain are portending a still-grim outlook (15.5%).

 

With the election behind us, worry about the stability of political and national security issues has declined two points from October to 28.7%, although still gaining 10+ points from November ’07 (18.1%).  It appears that McCain supporters are keeping this figure inflated…two in five (42.1%) voters for the vet and former POW continue to be concerned post-election, while fewer of those backing the new Commander in Chief express the same sentiment (28.2%).

 

 
 

Baby, it isn’t just cold outside…inside, it appears that many retailers will be getting a chilly reception from shoppers this holiday season as they reach peak practicality for a November reading…about half (49.8%) indicate they’ve become more practical and realistic in purchasing this month, down about two points from October (51.7%), though the highest reading recorded in the eleventh month, surpassing 46.2% in post-Katrina’s November ’05.

 

Further proof that retailers may need to focus on some of the not-so-fun stuff this year (you know, the roadside repair kits, socks, sensible gift cards, etc.)…those prioritizing needs over wants have reached a new high at 58.2%, slightly surpassing July’s 58.1% and rising half a point from October (57.8%).  Perhaps some retailers will find hope among shoppers who need to buy a new HDTV or wrap themselves in a new cashmere sweater…

 

 

Although the unemployment rate rose to 6.5% in October and out-of-workers are scrambling for seasonal holiday employment, consumers in general are slightly more optimistic for the U.S. employment future than they were in October…three in five (59.4%) still expect “more” layoffs in the coming 6 months, lowering several points from last month’s 63.5%.  One in three (30.7%) contend layoff levels will remain the “same” (v. 29.6%), while 9.8% hope for “fewer,” rising from 6.9% thirty days ago.  Pessimism is evident though when it comes to personal concerns with becoming laid off…8.2% now fear the pink slip, up from 7.5% last month and almost doubling from one year ago (4.3%).

 

With the holidays fast approaching and gifts left to purchase, it appears that reality has begun to set in with those in the fiscal mindset…compared to October, consumers have eased back on their intent to decrease overall spending (35.5%), increase savings (26.5%), and pay with cash more often (23.5%).  The financial priority, paying down debt, remains flat (36.3%).  However, consumers are still more likely to be financially conservative versus one year ago.

 

How flippant are you with your hard-earned pennies when it comes to living for the day?  When posed the statement “My philosophy of spending is ‘live for today, because tomorrow is so uncertain,’” the majority (53.8%) indicated that they disagreed/strongly disagreed, rising from the 48.7% who said the same one year ago.  26.0% say they’re prone to spend.

 

The nose-dive of the Dow has bulls seeing red…46.8% of investors say they would definitely/probably take a chance on Wall Street, up 4+ points from October (42.2%).  More than one in ten (11.6%) investors say they’ll buy up some bargains in the next 3 months, rising from 10.3% in October, while 4.5% indicate they plan to sell stocks, lowering from 5.3% a month ago.

 

While pump prices have lowered to levels not seen in years, it appears that consumers have committed to long-term changes in their spending habits…while nearly one in two (45.2%) is offsetting gas purchases by driving less these days, about the same number (43.4%) have vowed to continue to cut back on dining out (rising from 32.8% a year ago).  Two in five (39.6%) say they are still decreasing vacation/travel, while 37.2% are reducing their clothing purchases:

 

 

Although the lasting spending effects of $4/gal gas are still evident, consumers hold out hope for a continued decline in prices…almost one-third (28.6%) contends that prices at the pump will continue to decline through Christmas, rising more than 10 points from the 17.6% who felt the same come Thanksgiving.  Two in five (41.8%) feel that prices will remain the same…29.6% are predicting an increase, lowering substantially from the 42.8% who believed prices would rising through Turkey Day.  Drivers estimate a pump price of $2.64 on December 25^th, more than a dollar lower than the expected price on Thanksgiving ($3.76).

  

 

2008: The Year of the Bargain Hunter.  It’s chic to be cheap, and shoppers are going to have their eyes peeled for deals when crossing those special someones off their lists.  Case in point?  Almost one in four shoppers (23.6%) indicates they ONLY buy clothing on sale, rising from 20.4% last month and the highest reading since ’03.  The majority (64.2%) usually buys clothing on sale, while the minority (12.1%) says sales are not important.

 

While shoppers in general are more likely to head to department stores (29.3%) over discounters (18.9%) and specialty boutiques (15.3%) for Women’s Clothing, that one big discounter continues to trump the competition when it comes to particular stores.  More than one in ten (11.0%) shop Wal-Mart most often for women’s wares, followed by Kohl’s (8.6%), JC Penney (6.7%), Macy’s (6.5%), and Target (2.3%).

 

Meanwhile in the Men’s department, Wal-Mart maintains a more substantial lead…the big discounter is the top shop among 14.0%, ahead of JC Penney (8.6%), Kohl’s (8.4%), Macy’s (5.8%), and Sears (2.7%).

 

Parents seeking to doll up their progeny for endless holiday photo-ops appear to be most likely to head to discounters for these duds…Wal-Mart (13.4%) and Target (5.1%) lead in Children’s Clothing, followed by Kohl’s (5.0%), JC Penney (3.5%), and Gap (2.0%).

 

But where are consumers getting their kicks?  Payless and Wal-Mart continue to clash as they battle for the top spot in Shoes, and this month, the title goes to the discount specialty…Payless (10.3%) leads Wal-Mart (9.5%) in November, reversing last month’s results.  Kohl’s (4.9%), DSW (3.4%), and JC Penney (3.1%) round out the Top 5.

 

For some, the best Thanksgiving tradition comes the day after…so where can we expect these early risers to head for Toys on Black Friday (and the days to follow)?  Wal-Mart’s a likely best bet with one in five (19.5%) shoppers overall headed there most often…Toys R Us is a second place contender with 15.1%, while Target (6.5%), KB Toys (1.3%), and Kmart (1.1%) round out the top 5.  With Kmart touting its layaway plan (an extinct marketing tool for most other retailers), stay tuned to see if this tactic saves or sinks this dino-era discounter.

 

For those other girls and boys requesting a toy along the lines of an HDTV or Blu-ray player, expect savvy Santas to head to Best Buy or Wal-Mart, where one in two shoppers heads most often for Electronics.  Big box Best Buy (32.5%) leads the big discounter (17.3%), but both have gained share in the past year (from 28.8% and 16.8%, respectively).  Bankruptcy-bound Circuit City (6.7%) is a distant third, while Target (2.5%) and Sears (1.9%) complete the Top 5.

 

Perhaps extra guests arriving over the holidays will prompt some to purchase new bedding or towels…in Linens/Bedding/Draperies, Wal-Mart’s on top with 16.5% shopping there most often (relatively stable from ’07)…Bed Bath & Beyond (13.6%) is a close second, gaining from 10.8% share in November ’07.  JC Penney (6.8%), Target (4.8%), and Linens ‘n Things (3.9%) follow.  As LNT continues to shutter its stores, look for #6 Kohl’s (3.2%) to rise into the Top 5 soon.

 

 BIGresearch Retail Ratings Reports subscribers know where Bed Bath & Beyond is growing its customer base.  Take a peek at the latest report for Linens/Bedding/Draperies to get in the know: http://www.bigresearch.com/big-cias-rrr-oct08-linens.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.

 

BIG Briefing readers know that shoppers are striving to save in the Grocery aisle, and it appears that the EDLP prospect at Wal-Mart continues to drive savers into its stores…17.3% shop the Bentonville behemoth most often (up from 15.0% a year ago), while Kroger (6.4%), Publix (3.8%), Safeway (2.8%), and Stop ‘n Shop & Meijer (tied, with 2.3% each) follow not-so closely behind.

 

Although consumers continue to tighten their purse strings, most seem amenable to trying out the generally premium-priced organic section…62.0% admit they regularly or occasionally shop the all-natural aisle, but the items in one’s shopping cart can differ.  Those who identify themselves as “regular” organic shoppers purchase dairy products (69.1%), produce (67.0%), and breads (63.8%) most often, while “occasional” shoppers lean toward produce (48.5%), breads (27.3%), and cereals (25.4%) first.  “Regulars” opt for Whole Foods (14.6%) and Trader Joe’s (7.3%) for organics, while the “occasionals” shop most often at Wal-Mart (9.5%).

 

Price (68.5%) leads the pack as the reason to shop a store most often for Health & Beauty Care, so is it really a surprise that one big discounter maintains a lead that is three times the size of its nearest competitor?  Wal-Mart dominates this category with one-third of consumers (31.2%) shopping there most often…druggists CVS (8.6%) and Walgreens (8.5%) follow, while Target (6.6%) and Rite Aid (3.0%) round out the Top 5.  Following price as top reasons to shop are location (53.3%), selection (47.8%), and quality (25.6%).

 

We might be stating the obvious here, but it doesn’t appear that anyone’s going to tarnish Wal-Mart’s HBC crown anytime soon…the November 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 new growth to a retailer, confirms what we suspected for the retailer garnering 30%+ customer share.  Wal-Mart sports a relatively flat -0.2 rating, while closest “competitors” CVS and Walgreens gain slightly with +0.9 and +1.3 ratings, respectively.

 

 

Shoppers who parted ways with a particular Health & Beauty Care store in the past year listed high prices (24.0%) as the top reason for doing so, followed by inconvenient location (22.3%), long checkout lines (10.9%), poor customer service (10.4%), and poor selection (9.3%).

 

Corner druggists still have the lead in Prescription Drugs, yet one big discounter still wants to head up this block party…consumers head to Walgreens (15.9%) and CVS (13.6%) for the Rx cures for what ails them, but Wal-Mart continues to court consumers with 10.3% share (rising from 9.1% one year ago).  Rite Aid (5.2%) and Target (2.1%) complete the Top 5.
 

 

With the holidays on the horizon, retailers can give thanks this month for consumers, as spending appears to have perked up in November, according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who will spend more).  Save for the seasonal lawn & garden section, all categories improve from October, though it appears that the economic Grinch will keep consumers from spending near levels met in ’07:

Retail Merchandise Categories - 90 Day Outlook

(November 08 compared to October 08 and November 07)

Although the 90 Day Outlook saw improvement from October, six month purchase intentions for high-dollar durables didn’t benefit from the same uptick…most major categories, including computers, autos, furniture, appliances, jewelry/watch, and major home improvements, declined from last month and last year.  The continued bright spot is TVs…12.0% plans to purchase within the next six months (perhaps due to February’s digital conversion or to the “need” for HDTV), up from 11.6% in October and 10.1% one year ago.  Digital cameras also up from October (and on par with ’07), while DVD/VCR and vacation travel remain flat from last month.

 

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

 

What’s Hot? Consumers advocating saving!  They’re saving gas by Staying Home for the Holidays (90.0%), they’re saving time with Online Shopping (77.8%), they’re saving money with Fast Food Dollar Menus (67.5%) and Dollar Stores (64.3%), and they’re saving electricity with LED Holiday Lights (57.5%).  Day after Thanksgiving Shopping is still a hit with the under 35 crowd, thus saving on all of those Black Friday deals.  What’s Not?  Holiday Travel…need we say more?

 

 

Sincerely,


                                                                 

 

 

Editor

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