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Confidence drops two points from June

Practicality, needs over wants continue to rise

One-third say the economy won’t bounce back to pre-recession glory

Economic crisis is affecting the lifestyles of NINE in ten consumers

Holiday ’10 Preview: One in three will spend LESS

90 Day Outlook: Dimming confidence, rising practicality contribute to decline v. June

6 Month Purchase Intentions improve for several BIG ticket items

What’s Hot? Are Silly Bandz just plain silly?

Fresh Economic, Retail & Consumer Insights for Shopper Understanding Edited and Produced by BIGresearch®…
Providing Unique Insights Each Month from the Consumer Intentions & Actions Survey.

July 2010 
(Respondents Surveyed 6/30 - 7/7/10)

SPECIAL EDITION: VIDEO BRIEFING
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This special "video" edition includes a video briefing which recaps the key consumer insights for the month of July.

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This newsletter summarizes the pulse of the consumers based on the national BIGresearch® Consumer Intentions & Actions® (CIA) Survey each month. The CIA survey findings are available by shoppers of most major retailers and can be licensed and delivered via electronic download. For more information on the CIA, click here.


 

 

Continued frustration with Gulf oil spill and the lackluster job market seem to be manifesting in July’s consumer confidence reading…this month, 27.9% report they are very confident/confident in chances for a strong economy, down more than two points from June (30.2%) and the lowest reading since February (27.2%).  While confidence has still improved from Jul-09 (27.2%) and Jul-08 (18.8%), it remains 20 points below Jul-07 (47.8%).

As oil continues to pour into the Gulf, consumers continue to express their concern with political and national security issues…in July, 21.4% say they worry, up slightly from a month ago (21.1%), but remaining two points below Jul-09 (23.6%).

As pessimism towards the economy mounts, practicality similarly increases…this month, nearly one in two (49.1%) says they have a penchant toward sensible purchasing, rising three points from June (46.3%), though remaining lower than a year ago (51.0%).

In July, three in five (58.0%) maintain they focus on the necessities when making a purchase, up four points from 30 days ago (53.8%), but two points below Jul-09 (59.9%).

So, will practicality in spending continue? Is there hope for the future economy? Consumers aren’t so sure…this month, while more than a third (36.1%) indicated that the economy will rebound to its pre-recession glory, this figure has lowered from the nearly half (44.6%) who said the same a year ago. 32.1% say they don’t think the economy will bounce back fully and 31.8% just don’t know.

And, look for a practicality-based mantra to continue…over the next five years, consumers say the current economic crisis will lead them toward a more frugal path: considering purchases more carefully (49.3%), being more price conscious when buying food/clothing (47.5%), trying to stick to a budget (46.7%), and spending less dining out (44.0%). Only 12.5% of consumers say they current economic crisis won’t impact their lifestyle.



 

 

While the U.S. unemployment rate did lower to 9.5% in June, this less-than-impressive “improvement” didn’t do much to quell consumers’ concerns for long-term stability in the labor market…this month, one in three consumers (30.8%) portend there will be “more” layoffs over the next six months, rising from 28.6% in June.  Half (52.2%) contend that layoff levels will remain the same, flat from 30 days ago…fewer than one in five (17.0%) are optimistic for a decline, lowering from 19.2% in June.

The good news, though, is that those concerned with becoming laid off haven’t become greater in number…3.9% of those currently employed say they fear the pink slip, on par with last month and half of the Jul-09 reading (7.9%). 

Declining confidence has practical consumers zeroing in on their piggy banks this month…over the next three months, more than a third (35.1%) plan to decrease overall spending, increasing from 28.7% in June and this month’s top financial plan. Almost as many (34.5%) intend to pay down debt (up from 32.5% last month)…plans to increase savings (27.7%) and pay with cash more often (24.4%) also rise compared to June.

With U.S. stocks recently clocking their worst quarter since Dec-08, investors are feeling a bit less bullish in July…this month, 45.0% of investors say they would definitely or probably gamble on Wall Street, lowering a point from June (45.9%) as well as Jul-09 (46.1%).

Nationally, average gas prices are remaining below the $3/gal mark (source: AAA), but drivers are still wary that the cost of topping off may continue to pump up over the summer…consumers are anticipating fuel to reach an average $3.06/gal by August 1, on par with what was expected on Independence Day ($3.08).  Expect smart shopping strategies, such as shopping for sales more often (40.0%), taking fewer shopping trips (38.7%), using coupons more often (36.3%), and buying generics (32.3%), to prevail as drivers continue to look for ways to offset this expected rise at the pump.
 

 

SPECIAL Holiday ’10 Preview: While much of the U.S. is currently enjoying a sweltering summer, retailers are already thinking ahead to the holidays. It appears, though, that retailers may be met with a frosty reception…only 3.8% of shoppers indicate they’ll spend more for gifts compared to last year, while about one in four (28.3%) intend to spend the same. One in three (32.8%) are planning to spend less…popular budget-trimming plans include spending less overall, concentrating on “sale” items, doing more comparison shopping, and purchasing for fewer relatives (sorry, Aunt Mary):

It’s a little premature to make a wish list, but Women’s Clothing tends to be a popular and practical present to purchase…expect early bird shoppers to flock to these stores shopped most often: Walmart (12.1%), Kohl’s (10.0%), JC Penney (7.1%), Macy’s (5.8%), Target (3.0%).

Over in Men’s Apparel, Walmart remains the top store shopped (among 16.2%)…one in ten (10.1%) shops Kohl’s, while JC Penney (8.3%), Macy’s (5.4%), and Sears (3.0%) follow.

For that other big holiday – Back-to-School – expect Children’s Clothing shoppers to soon head to Walmart (13.5%), Kohl’s (5.0%), Target (4.7%), JC Penney (3.3%), and Old Navy (2.1%) for looks that will be a homerun in homeroom.

Shoes are also typically on the Back-to-School shopping list…look for the top two shops in this category, Walmart (12.0%) and Payless (11.1%), to make the grade with consumers. Kohl’s (5.5%), DSW (3.7%), and JC Penney (3.4%) round out the top five in this department. Not surprisingly, practical-minded consumers are most likely to trek to a particular Shoe store based on price (71.9% say so)…selection (53.3%), quality (39.9%), location (33.4%), and trustworthy retailer (14.3%) follow.

With Walmart wearing the footwear crown for 8 consecutive months now, is Payless likely to ever reign again? This month’s Consumer Migration Index (CMI), which tracks those who have immigrated to a store (new customers in 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 both retailers are facing current customer deficits (Walmart = -3.9 CMI, Payless = -4.9 CMI), risking their long-term customer bases.  The retailer to watch? #3 Kohl’s…the department store darling boasts a +2.1 CMI in this category:

Shoe shoppers of one year or less were most likely to cite high prices (26.7%) as reason to switch stores…poor selection (18.6%), unavailability of correct sizes (14.0%), poor quality (8.2%), and lack of newest fashions (8.1%) were also top culprits.

Switching gears to Electronics, Best Buy continues as the top big box on this block with 34.5% shopping there most often. One in five (21.6%) shops Walmart, while Amazon.com (3.3%), Target (2.9%), and Sears (2.3%) complete the top five.

When it comes to Sporting Goods, big discounter Walmart scores with 15.1% of shoppers…sports specialty shops follow: Dick’s Sporting Goods (12.1%), Sports Authority (4.9%), Big 5 (3.8%), and Academy (3.5%).

In the Grocery aisle, Walmart maintains its appeal with food shoppers…with 18.6% shopping there most often, the big discounter leads traditional grocers Kroger (6.7%), Publix (3.9%), Safeway (2.7%), and Shoprite (2.4%).

With nearly one in three (30.9%) shopping there most often for shampoos, soaps, and the like, Walmart continues to best competitors in Health & Beauty Care…druggists CVS and Walgreens follow (each with 9.4%), while Target (6.5%) and Rite Aid (3.2%) round out the top five.

With allergies prolific this summer, expect consumers to head most often to Walgreens and CVS for Prescription-medicated relief…16.1% and 15.6%, respectively, shop the druggists most often, while Walmart (11.9%), Rite Aid (5.1%), and Target (2.3%) follow.
 

 

Concerned with the damaging effects of the summer sun? Stay indoors and read ahead…this month, we’re taking a look at the Skincare & Cosmetics aisle. One in four adults (24.3%) heads to Walmart most often for moisturizers, powders, and foundations…CVS (6.3%), Walgreens (5.7%), Target (5.3%), and Rite Aid (1.7%) round out the top 5. Loyalty to Walmart, though, rises among the female crowd… 28.6% of women shop the discounter most often compared to one in five (19.8%) men, half of whom (47.8%) have no store preference.

While female shoppers are more likely to have a store preference for Skincare products, do their spending patterns vary as well? Well, yes…women contend they spend an average of $15.44 each month within this aisle, a few dollars more than men ($13.10). The same split can be seen within varying household incomes…those earning more than $50,000 per year spend about $16.08 a month, while those bringing home under $50,000 spend about $3 less on average ($12.82).

When it comes to buying a particular Skincare or Cosmetic product brand, consumers are most likely to opt for a brand they trust (44.8%). Other top reasons to reach for a particular product include price (32.5%), “it works best” (30.7%), quality (25.6%), and sale pricing (20.0%). Not surprisingly, females are much more likely to be swayed by trusted brand names, performance, and quality than their male counterparts.

While three in five consumers (59.4%) generally agree that the Skincare & Cosmetics aisle in their store is arranged in an easy to shop manner, two in five (42.9%) still indicate they regularly or occasionally have trouble finding the products they want to buy…why? 29.4% of these shoppers have difficulty finding the exact product form, 19.3% complain of stock-outs, 18.3% can’t find the right types of products needed, 18.2% have trouble locating the right brand, while 12.9% say the store doesn’t carry the item needed.

 

 

Dimming confidence and tighter budgets make way for a downtrodden 90 Day Outlook compared to June, according to the BIGresearch® Diffusion Index (those who say they’ll spend less subtracted from those who’ll spend more). While categories remain improved from Jul-09 and Jul-08 (shown in the table below), all remain depressed compared to a pre-recession Jul-07:

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

Despite the decline in confidence this month, six month purchase intentions for BIG ticket items improve from June and Jul-09 for many categories: autos, computers, furniture, home appliances, jewelry/watch, major home improvements, DVD/VCR, vacation travel, and TVs. Let’s hope this pick-me-up in planned spending lasts through the holiday season:

 

 

Sparks are flying – literally – with Fourth of July Celebrations, which top our list of what’s hot this month...the Apple iPhone 4 and Twilight: Eclipse prove popular among consumers overall. Men tune in for the MLB All-Star Game, while women are stocking jean shorts in their closets once again. What’s Not? While perfectly popular among the grade school sets, Silly Bandz just seem – well, silly – to your average consumer.
 

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