Transcript Document

Post-Recession
Retailing
How to Prepare for
Tomorrow’s Shoppers Today
Lois Huff
Sr. Vice President
Retail Forward, Inc.
614-355-4011
[email protected]
A New Retail World
How did we get
here?
What is happening
now?
What will happen
come the recovery?
2
Key Shopper Spending Drivers
Began to Unravel in 2007
Top Line Income
- Hurt by increasing job cuts
Open To Spend
- Reduced by rising fuel and food
prices
- Hindered by rising credit crunch
Long-Term Wealth
- Reduced by housing
depreciation, stagnation
- Devastated by plunging stock
market
Overall Confidence
- Reduced by all of the above
- Further inflamed by media fuel
3
The First Shopper Tipping Point: Feb-Mar 2008
Shaky job situation for
down market
Rising food and fuel prices
for all
Troublesome housing market
Many felt worse off about
investments
Perceptions Compared with Last Year
Much/Somewhat Better Off
No Change
Much/Somewhat Worse Off
Feb 2008
Mar 2008
Feb 2008
Mar 2008
Feb 2008
Mar 2008
Job security
24%
23%
59%
60%
17%
17%
Household income level
38%
38%
40%
39%
23%
24%
Credit card debt level
28%
29%
49%
50%
23%
21%
Monthly mortgage/car
payments
22%
22%
64%
64%
14%
15%
Worth of HH investments
25%
25%
52%
49%
23%
27%
Value of home
29%
29%
52%
49%
19%
22%
Highlighting/bolding indicates significant differences between column percentages
Source: Retail Forward ShopperScape™, February and March 2008
4
The Result: Sharply Curbed Short-Term
Spending Plans
Plan to Spend SOMEWHAT LESS at
Retail Stores During Coming Month
Compared With Last Year
40%
28%
Feb-08
Mar-08
Highlighting/bolding indicates significant differences between column percentages
Source: Retail Forward ShopperScape™, February and March 2008
5
The Second Shopper Tipping Point: Fall 2008
Plunging stock market
Emergency Economic
Stabilization Act of 2008
Destabilized shopper
sentiment
Percentage of shoppers
planning to cut back on
holiday spending shot up
from 37% to 52% post
bailout
6
The Result: Retail Enters a Holiday Abyss
Quarterly Retail Sales: Key Holiday Retail Channels
(percent change year-to-year)
20%
15%
10%
5%
0%
-5%
-10%
19681971197419771980198319861989199219951998200120042007
Source: U.S. Census Bureau
7
Shoppers Are Out of Gas
All shoppers are impacting
retail sales
But some are doing so
more than others
8
Majority Have Changed Their Behavior
> 50% across all
generational and
income segments
altered shopping
behavior
Gap between downand up-market
shoppers widens
with age
Middle market more
aligned with down
market
Percentage of Segments Changing
Behavior Due to Economic Downturn
100%
90%
Down Market (< $22,500)
80%
70%
Middle Market
($22,500 to $84,999)
60%
50%
Up Market ($85,000+)
40%
30%
20%
10%
0%
Gen Y
Gen X
Baby
Boomers
Seniors
Source: Retail Forward ShopperScape™, Aug. 2008
9
But Retail Spending Pullback Came In Waves
Both income and
lifestage are highly
correlated with
spending
Seniors with lower
incomes curbed
spending first
But seniors with high
incomes were last to
cut spending and
change shopping
behavior
10
Gen Y: Less Impact and Less Recovery “Power”
Intention to Spend Less in Coming Month
80%
70%
60%
GenY Down Market
GenY Middle Market
50%
40%
30%
20%
10%
GenY Up Market
0%
Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar08 08 08 08 08 08 08 08 08 08 08 09 09 09
18 to 27 year olds
Spending patterns less driven by wealth (housing equity, stock market)
Less likely to have tempered their spending in general
Future intentions shaped by tighter credit vs. dampened desires
Source: Retail Forward ShopperScape™, Feb. 2008
Mar. 2009
11
Gen X: Critical to Retail Decline and Recovery
Intentions to Spend Less in Coming Month
28 to 44 years old
80%
70%
Critical lifestage with
big impact on retailers’
health
60%
GenX Middle Market GenX Down Market
50%
40%
30%
20%
Highly reactive to
shopper tipping points
GenX Up Market
10%
0%
Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar08
08 08 08 08 08 08 08 08 08 08 09 09 09
Gen X up-market
shopper key to watch
for positive signs
Source: Retail Forward ShopperScape™, Feb. 2008
Mar. 2009
12
Baby Boomers: More Restrained Reactions
Age 45 to 63
Reactive to shopper
tipping points
Pronounced spike
following October
passage of the
“bailout”
Less severe pullback
post passage of
economic stimulus
package
Intention to Spend Less in Coming Month
80%
70%
Baby Boomers
Down Market
Baby Boomers
Middle Market
60%
50%
40%
30%
20%
Baby Boomers Up Market
10%
0%
Source: Retail Forward ShopperScape™, Feb. 2008
Mar. 2009
Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar08 08 08 08 08 08 08
08 08 08 08 09 09 09
13
Seniors: Sharp Drops, But Polarized Reactions
Intentions to Spend Less in Coming Month
Age 63+
80%
Pronounced spikes in
March, June and
October 2008 and
March 2009
Seniors Middle Market
Seniors Down Market
70%
60%
50%
40%
30%
More polarized
attitudinally based on
income
20%
10%
0%
Seniors Up Market
Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar08 08 08 08 08 08 08 08 08 08 08 09 09 09
Up-market seniors
most likely not to
change shopping
behavior
Source: Retail Forward ShopperScape™, Feb. 2008
Mar. 2009
14
Shopping Behavior Didn’t Change Overnight
Gradual
consolidation of
stores visited
Average Number of Retailers Shopped during
Past 4 Weeks by Broad Channel Segments
6.0
5.5
Linear FDM
Less in
food/drug/mass
channels than in
homegoods or
softgoods
FDM
5.0
Softgoods
4.5
Linear Softgoods
4.0
Linear Homegoods
Homegoods
3.5
3.0
Linear Other
2.5
Other
2.0
Source: Retail Forward ShopperScape™, Dec. 2007
Dec-
Feb-
Apr-
Jun-
Aug-
Oct-
Dec-
Feb-
07
08
08
08
08
08
08
09
Mar. 2009
07
08
08
08
08
08
08
09
15
Store Shopping Downtrend Outpaced Online
Average Number of Stores and Web Sites
Shopped during Past 4 Weeks
14
Linear Average # of Stores Shopped
Average # of Stores Shopped
12
10
8
Average # of
Web Sites Shopped
6
4
2
Linear Average # of
Web Sites Shopped
0
Dec07
Feb08
Apr08
Jun08
Aug08
Oct08
Source: Retail Forward ShopperScape™, Dec. 2007
Dec08
Feb09
Mar. 2009
16
Limiting Spending Across Categories
Using common tactics to limit spending
- Shopping less often
- Postponing purchases
- Reining in impulse buying
Often switching to cash or equivalent
Most Common Tactics for Limiting Spending
Spending less overall
Shopping less often
Buy fewer items on impulse
Buying only replacement/replenishment items
Buying only items can afford to pay with cash
Sticking to a list
Performing maintenance myself
Waiting longer to perform home maintenance
Clothing/
Outdoor
Grocery/ accessories/ Indoor home
home
food
shoes
improvement improvement
shopping
shopping*
shopping** shopping**
31%
39%
39%
36%
38%
48%
34%
23%
26%
42%
40%
23%
38%
34%
38%
43%
40%
33%
31%
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
17
Seeking Deals To Avoid Trading Down
Using ads to determine where to shop and
consolidating shopping at stores offering best value
Grocery shoppers combining variety of approaches
– coupons, ads, multiple item buying, stockpiling
In apparel, monitoring favorite store’s clearance
Most Common Deal-Seeking Tactics
Regularly monitoring favorite store clearance
Using ads to determine where shop
Shopping off-price stores
Consolidating shopping where get best value
Using coupons more often
Using ads to determine what buy
Buying multiple items at a time
Stockpiling sale items
Clothing/
Indoor
Outdoor
Grocery/ accessories/
home
home
food
shoes
improvement improvement
shopping shopping*
shopping**
shopping**
30%
26%
24%
37%
37%
17%
22%
17%
25%
23%
36%
32%
33%
33%
30%
30%
21%
21%
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
18
But Many Are Trading Down To Save
Trading down to less expensive versions of
products common
- More basics than fashion in apparel
- Less expensive brands
- Less expensive versions in grocery
Private brand popularity in grocery and home
improvement
- Not so much in apparel
Most Common Tactics for Trading Down
Clothing/
Indoor
Grocery/ accessories/
home
Outdoor home
food
shoes
improvement improvement
shopping shopping*
shopping**
shopping**
Not buying items that seem "too expensive"
47%
36%
Buying more basics than fashion items
27%
Buying less expensive brands
22%
24%
23%
6%
26%
25%
Buying more private/store brands
29%
Buying less expensive versions than usual
31%
*Only female shoppers surveyed
**Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
19
Some Categories Are More Vulnerable
In apparel, mom
sacrifices for the
kids
Footwear
purchasing down
Y-T-Y except for
men’s shoes
Percentage of Shoppers Purchasing
Apparel/Shoes/Accessories during Past 4 Weeks
Mar-08
Mar-09
Total apparel/shoes/accessories
74%
70%
Women's apparel/shoes/accessories
58%
53%
Kids' and teens' apparel
33%
31%
Men's apparel/shoes
31%
27%
Women's shoes
25%
21%
Men's shoes
10%
9%
Children's shoes
11%
8%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
20
Some Categories Are More Vulnerable
In homegoods, home
fashions down most Y-T-Y
Home improvement, CE,
small appliances also
down, not as steeply
Percentage of Shoppers Purchasing
Homegoods during Past 4 Weeks
Mar-08
Home improvement/ 33%
hardware/l&g
Mar-09
31%
Home fashions
37%
30%
Consumer electronics
18%
15%
Small appliances
12%
9%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
21
Cutting Back On Leisure…
Leisure-related
categories down
with books and
greeting cards
bearing heavy hits
Percentage of Shoppers Purchasing
Leisure Products during Past 4 Weeks
Mar-08 Mar-09
Books 33%
28%
Greeting cards 32%
27%
Craft/hobby supplies 17%
15%
Toys/dolls/non-elect/video games 11%
8%
Sporting goods
6%
5%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
22
… And On Looking Good
Personal care
purchasing also down
more than OTC and a
little more than color
cosmetics
Percentage of Shoppers Purchasing
HBC during Past 4 Weeks
Mar-08 Mar-09
Personal care products 60%
55%
Non-prescription drugs 46%
45%
Color cosmetics 27%
24%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
23
Cleanliness and Pets Are Even Suffering
Household cleaning
slides
Percentage of Shoppers Purchasing
Non-grocery Products during Past 4 Weeks
Even pets not
recession proof
Mar-08
Mar-09
Household cleaning products
67%
64%
Household paper goods
62%
59%
Pet food
47%
43%
Pet supplies
25%
22%
Office/school supplies
25%
21%
Auto supplies
16%
12%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
24
But Shoppers Still Have To Eat
… And Want To Drink
In groceries, several
discretionary
categories down
But salty snacks,
beer, wine and liquor
hold their own
Percentage of Shoppers Purchasing
Grocery Products during Past 4 Weeks
Meat/seafood
Dairy
Produce
Bread/bakery
Frozen foods
Dry or canned groceries
Salty snacks
Carbonated beverages
Non-carbonated beverage
Sweet snacks
Candy/gum
Delicatessen
Beer
Cigarettes and tobacco
Wine
Liquor
Mar-08
80%
80%
80%
79%
78%
76%
67%
65%
61%
60%
56%
34%
24%
23%
22%
15%
Mar-09
80%
80%
80%
78%
76%
74%
68%
63%
58%
57%
49%
33%
24%
21%
21%
15%
Highlighting indicates significant difference between column percentages
Source: Retail Forward ShopperScape™, March 2008 and March 2009
25
Home textiles/home
furnishings retailers
Upscale department
stores
ShopperShare YTY Indices
Shoe retailers
Traditional department
stores
Consumer electronics
retailers
Books/music specialty
stores
Office supply retailers
Craft/hobby retailers
Adult apparel specialty
stores
Sporting goods retailers
Value department
stores
Discount stores
Home
improvement/hardware
120
Drug
stores/pharmacies
Warehouse clubs
Supercenters
Liquor/wine stores
Supermarkets
Small-format value
retailers
Food/Drug/Mass Channels
Less Negatively Affected
Y-T-Y shopper share indices show most FDM channels about on par with
last year
Key
Dollar stores up
Food/drug/mass
Home textiles and home furnishings struggling most
Softgoods
Apparel-related LOTs weak
Homegoods
Leisure
100
80
60
40
20
0
Source: Retail Forward ShopperScape™, March 2008 and March 2009
26
When Will the Recovery Happen?
The Most
Likely
Scenario
Approach long-term ave. growth
Forecast 
Q1 ‘10
Q3 ‘08
Q4 ‘09
Q4 ‘08
Q3 ‘09
Q1 ‘09
Rebound 2010
Period of flat-to-negative growth
The Best
Case
Scenario
Approach long-term ave. growth
Forecast 
Q3 ‘08
Q2 ‘09
Q4 ‘08
Q3 ‘09
Q4 ‘09
Q1 ‘10
Q1 ‘09
Rebound 2009
Quicker signs of rebound
The Worst
Case
Scenario
Forecast 
Q3 ‘08
Q4 ‘08
Q1 ‘09
Q1 ‘10
Rebound 2011 or later
Extended period of flat-to-negative growth
27
Recovery Driven By Different Shoppers
Older segments have most housing,
equity wealth, spending potential
Median Household Wealth of Baby
Boomers
2004 and 2009F
Led way out of past two downturns
-
Early 90s -- accumulating
-
Dot.com bust -- in prime earning
years
$315,400
- 49%
$172,400
Wealth has been wiped out and are
closer to retirement
-
- 45%
$159,800
$94,200
Boomers will have less to spend
once able to retire
45 - 54
Path out more dependent on
younger cohorts
55 - 64
2004
2009F
Note: Median household wealth represents wealth of a household with a person between 45-54 and 55-64; 2009 figures are projections
Source: Center for Economic and Policy Research
28
Resulting Period of Sluggish Demand
Retail Sales by Channel
(percent change year-over-year, not seasonally adjusted)
10%
Forecast
8%
6%
Non-auto less gasoline
4%
FDM2
2%
0%
2003
Homegoods 1
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-2%
-4%
Softgoods 3
-6%
1 Homegoods includes Building Materials/Home Improvement stores, Nonstore, Furniture/Home Furnishings Stores, Consumer Electronics Stores, Jewelry Stores, Sporting Goods Stores,
Book Stores and Office Supply Stores
2 FDM includes Supermarket, Eating & Drinking Places, Discount Department Stores, Warehouse Clubs, Supercenters, Drug Stores and Small Format Value Retailers
3 Softgoods includes Apparel Stores, Shoe Stores and Conventional/National Department Stores
Sources: Retail Forward and U.S. Department of Commerce
29
Shoppers Will Continue to Deleverage
$$$ Shifts out of Retail
Consumer Debt Service Ratio
Getting fiscal house
in order
- Debt paydown
- Slower debt
accumulation
- Less home
buying
(% disposable income)
16
15
14
13
12
Anticipated decline in
consumer debt ratio
for several years
11
2 Flat
Quarters
and
Dropping
10
9
8
Sources: Federal Reserve Board and TNS Retail Forward
30
But Shoppers Will Also Be Less Stressed
Not Back to the Future … but Better than Today
Food inflation tapers a bit … but not to historical levels
Fuel inflation returns … but not to early 2008 levels
Wealth recovery will be underway
- Housing prices
- Stock market
- Income
Food Price Index
(percent change year-over-year)
5.4%
4.6%
3.8%
2000
2001
3.8%
3.1%
3.0%
2.3%
3.7%
1.9%
1.9%
2002
2003
2004
2.3%
2.3%
2005
2006
2007
2008F
2009F
2010F
2011F
3.2%
3.2%
2012F
2013F
Sources: U.S. Department of Commerce and TNS Retail Forward
31
Big Ticket Will Be Traumatized
What You Make Is
What You Spend
“WYMI-WYS” dominates …
Housing
Housing-related
“Designer” luxury
Financing-reliant
32
Shoppers Will Recover Via The LIFO Method
Some shoppers
less likely to
change behaviors
than others
Extent to which Behaviors Changed this Past Year
Seniors Up Market
Grocery Shopping
Senior up-market
shoppers less
likely to have
changed behavior,
especially in
groceries
Apparel Shopping
Senior
Senior
Up
Up
All
Market
All
Market
Female
Female
Shoppers Shoppers Shoppers Shoppers
Significantly
13%
3%
30%
11%
Somewhat
34%
20%
33%
34%
A little bit
28%
26%
23%
20%
Not at all
25%
52%
14%
35%
Highlighting indicates significant differences between column percentages
Source: Retail Forward ShopperScape™ February and March 2009
33
Shoppers Will Recover Via The LIFO Method
Gen X up-market
shoppers slower to
change but now
have pulled back
Extent to which Behaviors Changed this Past Year
Gen X Up Market
Grocery Shopping
Apparel Shopping
Gen X Up
Gen X Up
All
Market
All
Market
Female
Female
Shoppers Shoppers Shoppers Shoppers
Significantly
13%
11%
30%
26%
Somewhat
34%
30%
33%
33%
A little bit
28%
31%
23%
25%
Not at all
25%
28%
14%
16%
Highlighting indicates significant differences between column percentages
Source: Retail Forward ShopperScape™ February and March 2009
34
Gen X Up-market Segment
Made Significant Cutbacks
Year-to-Year Spending Changes on
Home Furnishings and Casual Apparel
Exception: home
furnishings up
vs. other, even
up-market,
segments
Apparel showed
sharpest
declines
Qtr 1
2008
Qtr 1
2009
Percentage
Change
Q:1 2008
Q:1 2009
Spent on home furnishings
past 3 mos.
All Shoppers
$147
$113
-23%
Up Market Shoppers
$265
$196
-26%
Gen X Up Market Shoppers
$221
$276
25%
Spent on casual apparel
past 3 mos.*
All Shoppers
$137
$113
-18%
Up Market Shoppers
$214
$169
-21%
Gen X Up Market Shoppers
$244
$189
-23%
Source: Retail Forward ShopperScape™, Quarter 1 2008 and Quarter 1 2009
35
Gen X Up-market Segment Cutback
More in HBC Than Groceries
But not as bad as apparel
Year-to-Year Spending Changes on Groceries and HBC
Qtr 1
2008
Qtr 1
2009
Pct. Chg
Q:1 2008
Q:1 2009
All Shoppers
$104
$102
-2%
Up Market Shoppers
$131
$123
-6%
Gen X Up Market Shoppers
$132
$127
-4%
All Shoppers
$35
$33
-7%
Up Market Shoppers
$45
$42
-6%
Gen X Up Market Shoppers
$48
$43
-12%
Spent on groceries past week
Spent on HBC past month
Source: Retail Forward ShopperScape™, Quarter 1 2008 and Quarter 1 2009
36
Gen X Up-market Segment Key To Watch For
Post-recession Spending
LIFO cohort key segment
to watch emerge from
recession
Percentage of Shoppers Planning to Spend
Much/Somewhat More Vs. Last Year
25%
Gen X Up Market
20%
15%
10%
All Shoppers
5%
Source: Retail Forward ShopperScape™, Feb. 2008
Mar-09
Feb-09
Jan-09
Dec-08
Nov-08
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
0%
Mar. 2009
37
Gen X Up-market Segment
Behaviors That Will Stick For a While
Grocery and Food
- Curbed dining out
habits
- Moved to more private
labels
- Clipped more coupons
- Motivated by specials
Apparel
- Large pull back on
spending and shopping
- Off price shift – brands
at value prices
- Monitor clearance and
sale racks
Source: Retail Forward ShopperScape™, Feb. 2008
Mar. 2009
38
Some Lasting Changes In Overall Behaviors
Will Persist For Years Due To Job Market
Top turnaround driver
- Job security/HHI
Others drivers:
- Fear
- Mindset shifts
- Stock market
- Personal health
- Housing market
- Credit
Reasons Why Shoppers Plan to Spend Less
Shoppers
planning to
spend less
at retailers
Percentage of total shoppers
51%
Retail pick up
most likely
depends on
change in:
My HH’s current financial situation
43%
Income/job market
Concerns about how the recession
will affect me/my HH in the future
40%
Attitude about
economy
Trying to simplify my HH’s lifestyle
28%
Mindset
Cut back in household income
27%
Income/job market
Decline in worth of investments
16%
Stock market
Job loss of a household member
12%
Income/job market
Health concerns/illness in the HH
7%
Family member
health
Decline in value of home
7%
Housing market
Cannot get affordable credit
3%
Credit market
Other (specify)
6%
Source: Retail Forward ShopperScape™, April 2009
39
Limits On Spending Will Be Lasting
Clothing, accessories
Extremely Likely to Retain Limiting Spending Tactics
and shoe retailers will
feel effects longer
Outdoor
Clothing/ Indoor home
home
- Less spending
accessories/ improveimproveGrocery
shoes
ment
ment
- Less frequent
shopping shopping* shopping** shopping**
shopping
Spending less overall
10%
17%
7%
7%
- Less impulse
Shopping less often
16%
purchasing
Buy fewer items on
More sticking to lists impulse
Buying only replacement/
replenishment items
More DIY than BIFM
Less appetite for
credit card debt
Less ability to
accumulate debt
17%
17%
5%
12%
9%
8%
13%
14%
12%
15%
12%
6%
5%
Buying only items can
afford to pay with cash
Sticking to a list
Performing maintenance
myself
Waiting longer to perform
home maintenance
13%
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
40
Bargain Hunting And Pre-shopping Continues
Grocery shoppers will continue to use ads, coupons, and multiple item or
stockpiling behaviors
Apparel buyers will continue to hit the clearance racks—with possible
disappointment
Increased use of circulars and coupon clipping results in greater preshopping influence
Extremely Likely to Retain Deal-Seeking Tactics
Grocery/
food
shopping
Regularly monitoring favorite store clearance
Using ads to determine where shop
Shopping off-price stores
Consolidating shopping where get best value
Using coupons more often
Using ads to determine what buy
Buying multiple items at a time
Stockpiling sale items
12%
10%
18%
14%
14%
14%
Clothing/
accessories/
shoes
shopping*
19%
14%
9%
8%
Indoor
home
Outdoor home
improvement improvement
shopping**
shopping**
14%
13%
9%
7%
12%
12%
8%
7%
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
41
Most Will Return To Previous Store Choice Sets
Only about one in ten
shoppers to continue to
narrow store choices to
get the best value
Extremely Likely to Retain Deal-Seeking Tactics
Grocery/
food
shopping
Regularly monitoring favorite store clearance
Using ads to determine where shop
Shopping off-price stores
Consolidating shopping where get best value
Using coupons more often
Using ads to determine what buy
Buying multiple items at a time
Stockpiling sale items
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
12%
10%
18%
14%
14%
14%
Clothing/
accessories/
shoes
shopping*
19%
14%
9%
8%
Indoor
home
Outdoor home
improvement improvement
shopping**
shopping**
14%
13%
9%
7%
12%
12%
8%
7%
42
Luxury And Gourmet Markets Will Contract
Aspirational shoppers who previously bought
luxury and gourmet products pulling back
Swarovskiencrusted toilet
- $75,000
Moderate brands gain
Grocery shoppers shift to more private brands
and less expensive formulations sticks for
many
Extremely Likely to Retain Trading Down Tactics
Not buying items that seem "too expensive"
Buying more basics than fashion items
Buying less expensive brands
Buying more private/store brands
Buying less expensive versions than usual
* Only female shoppers surveyed
** Shoppers participating in indoor/outdoor projects
Source: Retail Forward ShopperScape™, February, March and April 2009
Grocery/
food
shopping
19%
12%
11%
Clothing/
accessories/
shoes
shopping*
20%
12%
10%
3%
Indoor
Outdoor
home
home
improve- improvement
ment
shopping shopping
7%
8%
7%
7%
43
Cutting Labor More Risky Than Cutting Inventory
Retailer cutbacks to conserve cash led to:
- Cutting labor
- Cutting inventory
Labor cuts more likely to affect shoppers
negatively
Inventory cuts more likely to affect
apparel
Percentage of Shoppers Very Much/Somewhat
Reducing Spending as a Result of Retailer Cutbacks
Fewer open checkout registers
Less knowledgeable salespeople on the floor to answer questions
Fewer salespeople on the floor to answer questions
Limited apparel selections
Limited home improvement products selections
Fewer unique products
Fewer premium products
Limited consumer electronics or appliances selections
Limited home furnishings selections
52%
51%
47%
38%
34%
33%
31%
31%
29%
Source: Retail Forward ShopperScape™, April 2009
44
Even When Former Shoppers Return,
They’ll Be Re-Wired
Some temperate spending
for awhile
Some trained only to shop
“on deal”
Some trading down will stick
with new patterns
Some losing so much
ground, shopping behaviors
permanently changed
Most will return to favorite
pre-recession stores
But prepare to welcome
back previous -- but
transformed – customers
45
Some Retailers Will Fare Better Than Others
Views about service only
somewhat related to
intention to shop more
when economy improves
Top 5 most improved are
FDM players, Amazon
Top 5 most likely to shop
more post-recession
also (different) FDM
players and Amazon
Publix and Amazon in
Top 5 in both categories
Source: Retail Forward ShopperScape™, March and April 2009
Retailers Ranked on Customer Service and
Future Shopping Intent by Past 4 Week Shoppers
Customer Service Intention to Shop
Improved from
More When
Last Year
Economy Improves
Publix
Kroger
Walgreens
Amazon.com
Albertson's
Barnes & Noble
SuperTarget
Walmart Nbrhd Market
Kohl's
Bed Bath & Beyond
Lowe's
CVS/pharmacy
Costco
Safeway
JCPenney
Sam's Club
Best Buy
Target
Macy's
The Home Depot
Walmart
Walmart Supercenter
Sears
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
2
18
20
1
19
11
13
4
6
14
10
21
3
22
16
7
17
9
15
12
5
8
23
46
An Uneven Recovery at Retail
E-commerce, clubs, supercenters positioned to benefit most
Modest growth for most specialists, food/drug
Mass merchants continue to suffer
Estimated Compound Annual Sales Growth Rate, 2008–2013
15.0%
7.9%
4.7%
CE/
E-commerce Clubs and
Super- Appliance
Stores
centers
4.4%
Apparel
and Shoe
Stores
4.3%
Drug
Stores
3.6%
Building/
Hardware
Stores
3.3%
2.8%
2.2%
SuperHome
Furniture
markets Furnishings Stores
Stores
Discount
Dept.
Department
Stores
Stores
-0.1%
-0.9%
Sources: U.S. Department of Commerce and Retail Forward
47
Some Sectors Will Fare Better Than Others
Food, drug, mass channels
Least affected by recession
Supercenters and warehouse clubs
fare best, lead the recovery
Discount department stores and
grocery stores suffer most, recover
more slowly
Necessities will remain strong
DIY will remain strong
Good value will remain a
requirement
- Exposure of new generation to
much better PB than in the past
48
Some Sectors Will Fare Better Than Others
Homegoods channels
Ongoing stress -- slow housing
market recovery, focus on big
ticket/credit reliant purchases
Cash-based, lower ticket will return
first, do better
Major project, big ticket suffers more,
recovers more slowly
Big ticket will remain replacement or
trade down due to credit constraints
- Not “aspirational” or
emotional/desires
Ability to DIY, not DIFM
49
Some Sectors Will Fare Better Than Others
Softgoods channels
Hardest hit retail
sector, with longest
recovery
Non-essentials will
suffer most
“Good enough”
products will do well
“New luxuries” and
“investment dressing”
will replace
conspicuous
consumption
50
Companies Responding to Accelerated
Section 2 - Looking
Ahead: OpportunitiesMindset Will Fare Better
Shifts
In Consumer
Accelerating Shifts…
Connectivity, digital social
networks
-
Build, leverage communities
-
Create channel agnostic
presence
Desire for customization/
personalization
Requirements for price
transparency
Affordable green / values
shopping
-
Not just organics
-
Sustainable, fair practice
-
Responsible, trusted
51
Identify New Messages for New Needs
Repositioning required
Luxury: “new luxury” for
affluents; affordable luxury for
middle-income households
Discretionary/non-necessities:
investments, experiences,
memories, emotional value
52
Focus on Relevant “Value”
Relevant to my budget
- Give me value for the
money
- “Good enough” trumps
best
Relevant to my interests
and lifestyle
- Products and services
I want and value
Relevant to my personal
priorities
- Produced, packaged
and sold consistent
with my values
53
Identify and Solve a New Problem
Address relevant
problems: less money to
invest in wardrobe
Huge launch for new Tide
Total Care line
Positioned as a more
budget-friendly alternative
to dry cleaning
- Protects “newness” of
clothes
Tie-in with Ann Taylor Loft
in store, web site, cobranded takeaways,
Facebook
Tide POP displays at
Target with fabric samples
54
Rethink “Competition”
Brands under attack by non-brands:
-
Bottled water by tap water
-
Clothes dryers by clothes lines
-
Household cleaners by “water and
vinegar”
-
Cars by bikes and walking
-
Eating out by cooking
Product solutions vs. services
-
Buy the replacement
-
Identify new profitable niches
*Global Shades of Green, TNS
55
Leverage All Touchpoints
Every person, every
interaction is an opportunity
Wireless Shoppers Spending by Channels Shopped
(Index Values)
Modest demand requires
more vigilant preparation
- Seamless
- Channel agnostic
- Simplified
- Personalized
- Community
Average of all
Shoppers
Offline Only
Online Only
Multi-Channel
90
92
94
96
Plan Spending
98
100
102
104
106
Phone Cost
Source: TNS Compete
56
Corporate Responsibility Will Matter More
The Buck Stops…
Whom Do You Hold Responsible for Recalled Chinese Products Being Sold to U.S. Consumers*?
Don't blame anyone
U.S. trade policymakers
Chinese-government inspectors
U.S. retailers buying from companies that import goods from China
U.S. retailers directly importing goods from China
10%
27%
38%
40%
42%
U.S.-government inspectors
45%
Chinese manufacturers
46%
U.S. manufacturers using Chinese manufacturers for production
56%
*Among shoppers who are aware of a recall
Source: Retail Forward ShopperScape™, September 2007
57
Trust Will Be The New Currency
Anticipating and authentically
responding to shopper values
Regaining … and retaining …
shopper trust
Requires greater
self-governance
amid global complexities
58
Unprecedented Era Requires
Unprecedented Action
This era is unique
Creating a new breed of
consumers with unique
behaviors, priorities and
values
Understanding those
changes and adjusting
now is a strategy for longterm growth and
positioning
59
Thank You!
Email questions or comments to:
[email protected]
60