'How America Shops' 2006 Study Sees a Major Shift in Shopping Behavior, Consumers Cut Spending
Tuesday, 25 April 2006
The American shopper's mindset has dramatically shifted since 2001, reflecting a new "Never Normal" environment they now live in. As a result, they are anxious, cautious, calculatingly price-conscious consumers who have reduced spending across most key indicator categories measured by “How America Shops” 2006, the 10th bi-annual, national consumer study from New York city-based retail marketing consultancy WSL Strategic Retail (www.WSLStrategicRetail.com).
In other key findings overall spending is down while the frequency and variety of shopping trips holds steady, the retail landscape has reached a state of total saturation, and service has re-emerged as a leading consumer demand and loyalty driver.
The Study entitled, "How America Shops 2006, Swiftly Spinning the Retail Planet," is based on interviews with 950 consumers (760 women, 190 men age 18 to 70).
It marks the dawning of what veteran retail consultants Wendy Liebmann and Candace Corlett call a "Never Normal" retail decade in which shoppers seek safety and security in their day-to-day lives as well as in their shopping life.
"Post 911, consumers found themselves in a 'New Normal' retail landscape, as we reported in 'How America Shops 2004, but today they reel in a 'Never Normal' world rife with unrelenting shocks that range from corporate scandals, war and tsunamis, to Katrina, see-sawing oil prices, and who knows what comes next. They anxiously wait for whatever may come next and shop accordingly," said Liebmann, WSL Strategic Retail founder and principal.
Spending Down Widely but Shopping for Necessities Up, Store Visits Hold Steady
Reacting to these uncertain times, women reduced spending across six "Key Expenditure Categories " (Shopping, Savings and Investment, Education, Leisure Travel, Entertainment, and On Myself) by a net average of minus 17 points, reported "How America Shops 2006." While "Shopping" was the sole category to show a net spending increase (plus 6), these purchases were on necessities, including food, medicine and pets, while spending fell sharply for discretionary categories like cosmetics, fragrance, and home décor.
Of 14 "Leading Indicator Categories" surveyed only pet supplies (plus 19), food (plus 18), and prescription medications (plus 18) showed substantial net increases in spending over the previous year.
"There were dramatic declines in everything from cosmetics to computers. This isn't necessarily about using less or doing without," noted WSL principal Candace Corlett. "Rather it's about smart shoppers buying at the lowest price, traveling further to save money and trading down to lower-priced brands.
Spending Less, But Still Shopping
While consumers spent less overall, they still shopped virtually the same number of outlets (3.6 in 2006) each week as in 2004 (3.4) and made the same number of weekly shopping trips (3.9) in 2006 and 2004.
"Shopping is both a necessity and entertainment so while consumers may have to less money to spend, that doesn't necessarily affect their enjoyment of the shopping experience," added Corlett. "What is fundamentally different is where consumers shop and their shopping mindset."
Today's women shoppers are price-conscious and less willing to pay a premium for convenience than previously. "Given the events of the past five years, it's no surprise that their attitudes to shopping are tightly focused on saving money," added Liebmann
An End to Shopping Democracy
For the last decade the concept of "shopping democracy" defined the American retail experience, but no more. While anxiety impacts all income groups in this Never Normal decade, a growing gulf has emerged between where affluent and lower-income consumers shop. For the first time in years, how much money a shopper has defines where she or he shops.
"Throughout the '90s and into early 21st century, consumers of all income levels shopped most retail channels," said Liebmann. "Wal-Mart drove this phenomenon by educating low-income shoppers that they were entitled to name brands at low prices everyday. Then Target taught them they were entitled to great design at low prices everyday. At the same time, higher-income shoppers stretched their dollars by shopping at discount and club channels.
"But today most shop where they can best afford things, without undue temptation. It's almost like a return to the '80s when those with more money shopped at premium-price retailers and those with less shopped lower-priced outlets," Liebmann added.
Retail Reaches Saturation, Service with Respect Emerges as Key to Loyalty
Retailers can no longer expect to gain shoppers in the coming years. Retail reach has been maximized, which requires retailers to focus on building frequency and transaction size.
Until 2006, many channels, including the Supercenter, Warehouse Club, Dollar store and the Internet, consistently attracted a broader base of shoppers year-to-year, but no longer. But when WSL Strategic Retail asked where consumers had shopped in the last 90 days (a key How America Shops® benchmark), there was little growth since 2004 in the percentage of people shopping any channel.
“How America Shops”¨ studies have shown building loyalty has moved beyond price, product and location. Emotional factors, such as "a good place to spend time browsing," and a place that "attracts customers I feel comfortable around," now play a key role.
But in a “Never Normal” world what matters most to shoppers today is "service with respect."
"Service with respect has become the foundation on which store loyalty stands," said Corlett. "Women want bargains, to accomplish a lot in one trip, and interesting items, but if the level of service and respect is found wanting, none of that matters."
"In a time of caution, insecurity and the Never Normal, shoppers look to retailers to provide a connection, a sense of intimacy and security as never before. Retailers who hope to boost transactions and engender loyalty among a finite shopper base will take this to heart. " Liebmann concluded. "It's all about building trust, every day"
Methodology
How America Shops 2006 was conducted online between November 1 and November 8, 2005 among 950 consumers, 760 women and 190 men, drawn from a nationally representative sample. Conducted in the aftermath of Hurricane Katrina and soaring fuel prices, key questions were repeated in February 2006.
WSL Strategic Retail, which this year marks 20 years in business, launched its HOW AMERICA SHOPS® studies in 1989, to chart the evolution of American consumer shopping habits and attitudes. Founded by Wendy Liebmann, WSL Strategic Retail is a consulting business offering global retailers and manufacturers strategic solutions to marketing problems.
The strategic approach focuses on bringing shoppers to stores and buyers to brands through the application of proprietary tools, including: up-to-the-minute understanding of shoppers, knowledge of global trending, exclusive access to retail decision makers and ideation techniques. Contact WSL Strategic Retail at 212,924.7780 or visit www.WSLStrategicRetail.com.