The Checkout 2.10 - 2009 Holiday Spending


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The latest edition of The Checkout is available for download today. Issue 2.10 recaps the the findings and trends of 2009 as well as predictions for what's to come for the rest of 2010. Interestingly, the latest edition finds that shoppers reported walking away from the shelf empty-handed due to price and limited product selection. This fact could be related to some retailers using SKU rationalization methodologies that do not account for low-velocity items having shopping-basket gravity - the pull some products have on other complementary products. Without a clear understanding of retailer-specific shopping patterns and basket drivers, the wrong SKUs could be cut, leading shoppers to take their business for that entire category elsewhere.

In focus this month: 2009 Holiday Spending

Recessionary pressures have made us a nation of shopping procrastinators.

The game of chicken between shoppers looking for deals and retailers seeking sales intensifies.

2009 holiday shoppers wanted instant gratification, free shipping, and free stuff.

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The Checkout 2.10 - 2009 Holiday Spending

  1. 1. the inside the in-store experience in focus: 2009 Holiday Shopping This month we asked shoppers about their holiday shopping plans this season. Do they expect to spend more, less, or the same compared to last year? Which retail channels IN THIS ISSUE will be most affected? 2009 Year in Review • Recession or not, shoppers are slowly coming back. • The time-versus-money dichotomy continues. What does that mean for your shoppers? • Quick fill-in trips help ease pressure on household cash flow. • Spenders are using more convenience-based shopping aids and in-store advertising. • SKU rationalization: Is it working? Why some shoppers are walking away. • Mobile shopping shows upward mobility. In focus: Holiday Spending • Recessionary pressures have made us a nation of shopping procrastinators. • The game of chicken between shoppers looking for deals and retailers seeking sales intensifies. • 2009 Holiday shoppers wanted instant gratification, free shipping, and free stuff. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  2. 2. page 2 Coupons and free shipping high on shoppers’ wish lists Holiday Specials & Shopping Tactics ? = “Have you taken advantage of any of the following holiday gift specials or sales?” Newspaper/store flyers and coupons 46 Special gift card savings (in-store) 16 Free shipping for online orders 45 Friends and family discounts 15 Buy one/get one half-price offers 37 Competitor price-matching offers 13 Instant rebates 31 Last-minute deals 13 An online offer that was e-mailed to you 28 Special gift card savings (online) 12 Additional savings from store Special loyalty or appreciation rewards 28 7 credit card offer An in-store offer that was e-mailed to you 26 Offers delivered by social networks 3 Black Friday deals 23 Refer-a-friend programs 2 21 Offers delivered by Mail-in rebates 1 mobile/smart phone apps Early-bird door-buster specials 17 Other In-store 2 Daily specials on a store's Web site 16 Out-of-store None of the above 15 After a lackluster fourth-quarter holiday-shopping season, store coupons and free-shipping offers might have been some of the best tools retailers used to salvage their 2009 sales figures. In the wake of the worst economic crisis in decades, these two incentives top the list of gift specials or sales shoppers used most. In fact, nearly half of those surveyed indicated they took advantage of store coupons (46%) or free online shipping incentives (45%) when they shopped for gifts in 2009. Instant gratification reigns; shoppers were most attracted to promotions that offered the most immediate forms of reward in terms of cash back, free shipping, or free merchandise. The fewer hoops you make shoppers jump through, the more likely they are to participate in your promotion. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  3. 3. page 3 Holiday shopping holdouts Despite the abundance of early shopping events like Black Friday and Cyber Monday, most shoppers reported waiting until December before doing the bulk of their holiday shopping. Shoppers indicated that they intended to do most of their shopping, both online and in-store, in the two weeks prior to December 25 rather than during the traditional retail spikes of Black Friday and Cyber Monday. Consistent with our findings on late-season holiday shopping and retail promotions, many shoppers planned to wait until Green Monday (the last day to take advantage of free-shipping offers). The Holiday-Shopping Time Line ? = “When do you do most of your in-store and online shopping?” (%) 60 50 40 30 in-store online 20 10 0 1-Dec 2-Dec 3-Dec 4-Dec 5-Dec 6-Dec 7-Dec 8-Dec 9-Dec 10-Dec 11-Dec 12-Dec 13-Dec y 14-Dec 15-Dec 16-Dec 17-Dec 18-Dec 19-Dec 20-Dec 21-Dec 22-Dec 23-Dec 24-Dec 25-Dec 24-Nov 25-Nov 26-Nov 27-Nov 28-Nov 29-Nov y 30-Nov ng ay da da vi id on on gi Fr ks rM nM k an ac be ee Th Bl Cy 2 Gr issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  4. 4. page 4 Frugal buying declined throughout 2009 Shopping Behavior Compared to Three Months Ago ? = “In the past three months, how has your shopping behavior changed?” (%) 1Q’09 61 37 2 2Q’09 54 44 3 Total 3Q’09 56 42 3 4Q’09 53 44 3 1Q’09 56 43 * *3 Males 2Q’09 51 47 * 3 3Q’09 52 46 * 3 4Q’09 46 51 * 3 1Q’09 66 * 34 1 2Q’09 56 42 2 * Females 3Q’09 60 38 3 * 4Q’09 59 37 4 * Buying fewer/ Buying more/more cheaper items expensive items no change Indicates significant difference from previous quarter at 95% confidence level Indicates significant difference between males/females at 95% confidence level * While frugal buying dominated much of 2009’s shopping expenditures, the trend lessened as the year continued. And while men were more inclined to open their wallets over the course of the year, females too showed a similar pattern of gradually loosening the purse strings. The question is whether or not this trend will continue through 2010. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  5. 5. page 5 2009 shopping trips price- and convenience-driven In 2009, we saw shoppers take on a more utilitarian view of shopping – looking to get in, find what they need, and get out without overspending and without having very much fun. Shoppers are realizing that they might have to change their shopping behaviors to adjust for continuing recessionary conditions. Instead of getting everything at once, they are increasingly using more quick fill-in trips to avoid larger grocery receipts and impact on the family budget. However, while both price and convenience have consistently dominated shoppers’ priorities the entire year, both factors seem to be trending downward heading into 2010, possibly indicating that the period of retrenchment for many shoppers could be easing, and a refocus on quality and experience might soon return. Everyday Shopping Goals “When thinking about your everyday shopping needs (food, ? = cleaning products, etc.), what would you say is the primary goal you are trying to meet from each trip you take?” 29 Get everything in single trip, 29 saving the need for more trips 26 26 28 23 To spend as little as possible 26 24 8 Quick fill-in trips to replace 10 the things I use as I go 11 11 12 A comprehensive restocking 12 of the items I have used 12 14 8 To satisfy the needs of all my 11 family members 11 11 Q1 Q2 To find the freshest and 7 8 Q3 (%) 7 best quality items 7 Q4 6 Spend as little time in 7 Indicates significant the store as possible 6 difference from previous quarter 5 at 95% confidence level 1 Be entertained and 2 have a fun time 2 2 issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  6. 6. page 6 Spenders utilize more experience- and convenience-based shopping aids ? = “Thinking about your most recent shopping trip to help you shop?” which of the following did you use in the store for groceries, Shopping Aids 44 Shopper discount card 45 43 Directional signage 36 * 40 Self-checkout 29 * 38 Coupon - manufacturer 49 33 Coupons - store 38 * 24 Circular - newspaper 37 * 22 Circular - in-store 27 21 In-store associate 10 * Message on shelf 18 18 Spenders (People shopping more) Savers (People shopping less) (%) Mobile phone 12 * Indicatesquarter at 95% confidence level previous significant difference from 6 * 0 10 20 30 40 50 60 Since the start of the year, shoppers appear to rely more on coupons, from both manufacturers and retailers, to help them shop for groceries. While coupon use has been increasing, other forms of traditional shopping aids, such as directional signage and in-store associates, have been steadily decreasing. However, when viewing the shopping-aid preferences of Spenders (those who report shopping more) alongside Savers (those shopping less), stark differences in recessionary coping strategies appear. The Savers segment shows higher price sensitivity and corresponding shopping strategy using circulars and coupons, from both manufacturers and retailers, significantly more than their Spender counterparts, who are using more convenience-based shopping aids such as directional signage, in-store associates, self-checkout, and mobile phones. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  7. 7. page 7 Time is greater than money Throughout 2009, shoppers notably chose price as their primary purchase consideration. However, with bargain hunting at its lowest point of the year, customers appear willing to spend more money if it saves them time. Both of these changes represent significant differences from shoppers’ sentiments earlier in the year. In the short term, more shoppers were willing to chase deals, but as the recession lengthens, fewer are willing to put in the extra time and effort. Shopper Values ? = “Currently, where do you believe you fall between each of the following?” Q1’09 41 39 15 6 (%) Q2’09 37 41 17 5 seek out seek out lowest possible price American-made Q3’09 39 40 16 5 Q4’09 37 41 17 5 Q1’09 35 42 19 5 save money by Q2’09 31 45 19 5 spend more shopping around but save time Q3’09 30 43 21 5 Q4’09 29 44 22 5 Q1’09 35 41 19 6 Q2’09 32 44 19 6 save today, buy now buy tomorrow on credit Q3’09 33 42 18 6 Q4’09 33 42 19 6 Q1’09 22 44 26 8 stick with familiar Q2’09 22 47 25 6 switch brands or brands or items try new brands Q3’09 more often 22 47 25 6 Q4’09 22 47 25 6 Q1’09 14 34 37 15 Q2’09 14 36 38 13 buy individual-sized items buy in bulk Q3’09 13 37 37 13 Q4’09 14 35 39 12 Q3’09 15 46 32 7 buy private-label/ buy national/ store brands name brands Q4’09 16 45 31 8 describes more Indicates significant difference from previous month at 95% confidence level. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  8. 8. page 8 Spenders are walking away empty-handed because they can’t find what they want MAIN Reason for Walking Away – Spenders Vs. Savers “Thinking about your retail shopping in general, in the past three months, have you gone ? = to a store to purchase a specific item but did not make a purchase? If so, what was the MAIN reason why you walked away from the aisle without making a purchase?” I couldn't find the exact item, product, 37 or size I was looking for 32 36 The price was more than I wanted to pay 48 I couldn't find the brand that 8 I was looking for 9 6 The aisle was crowded 4 3 The aisle was confusing/disorganized 3 The store was dirty 2 Spenders (People shopping more) Savers (People shopping less) (%) 1 0 10 20 30 40 50 60 The biggest turnoffs for shoppers continue to be high prices and limited store selection, although shoppers do appear to be less sensitive to price than they were earlier in the year. Spenders also seem less likely to list situational factors like cleanliness and store organization and layout as primary deterrents from making a purchase. Not surprisingly, Savers reported price as the main factor for not making a purchase, while Spenders couldn’t find the exact product they were seeking. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  9. 9. page 9 Spenders are having fun again in the store and online Consumers as a whole, seem to enjoy shopping less, with more shoppers indicating that they do not think that everyday shopping is relaxing and fun. Spenders who want to be entertained and have fun go to the stores to explore and relax, but along with that, they also end up buying things they didn’t plan to purchase. Online shoppers tend to be planners and explorers who do preshopping research, prepare a shopping list, and shop primarily by price once a product is chosen. Online shoppers also report that they are more likely to not make a purchase if they do not find the exact item for the price they wanted to pay. The adventurous Spenders are more likely to explore the store environment and view shopping as a relaxing and fun activity – and thus more susceptible to make impulse purchases (43%). Their shopping preferences also continue to reiterate their focus on convenience with more than a third (34%) saying they are willing to pay more to make their lives easier and expressing deep affinity for online shopping. Conversely, Savers are not having fun in the store and focus on discipline and price, being sure to use shopping lists and coupons and refraining from browsing. Feelings About Shopping – Spenders Vs. Savers ? = “Which of the following best describes how you feel about shopping?” 47 I like to explore the store 40 I often buy things that 43 I did not plan to buy 30 Shopping is how I relax 25 35 I always prepare a list 37 I will pay more if my 34 life is made easier 17 Online shopping is the 34 best use of technology 29 I seek out coupons 34 for everything 39 23 Shopping is fun 11 Brand names are extremely important to me 11 23 Spenders (People shopping more) Savers (People shopping less) (%) 0 10 20 30 40 50 issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  10. 10. page 10 Coupon usage climbs Coupon usage grows, and grows, and grows. Recessionary pressures have reshaped the shopper mind-set and have significantly altered the way they prioritize their time, shopping trips, retailers, and more importantly - their money. As seen in prior sections of this report, coupons and circulars are beginning to play a much larger role in shoppers’ money-saving arsenal. Savers are taking it one step further, and have reduced the amount of time and money they spend on the Internet. Spenders, who are spending more and more often, are increasingly using the Internet to compare prices and make purchases, both via a computer and their mobile phones. New Shopping Behaviors “Which of the following are new behaviors you have started ?= in the past three months when you’re shopping?” 45 Have started/am using more store 43 or manufacturer coupons 47 42 Have started/am using store circulars 41 more often to find deals 42 42 Reading packaging or signage 38 more to find better deals 38 31 Have started/am using 30 Internet coupons more often 31 32 Have started/am using Internet 30 more to compare prices 27 18 Have started/am using store Web sites 15 more often to make purchases 14 9 Q2 Driving farther to save 9 money on purchases 9 Q3 (%) Q4 4 Using cell phone to help me shop 4 4 Indicates significant difference from previous quarter at 95% confidence level 21 None of these 20 18 issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  11. 11. page 11 One-stop shops are tops When selecting stores, consumers prefer to shop at retailers that allow them to get all of their shopping done in one place. In addition to selection, everyday low pricing and the price/quality mix rounded out the top three most important criteria for shoppers. Spenders are concerned with retailers’ breadth and quality of products and feel that the store environment is a direct reflection of who they are as people. Unsurprisingly, Savers choose their retailer primarily by price considerations, buying less and seeking the lowest prices. Store-Selection Criteria “Thinking again about your everyday shopping needs, what ?= are the top three important criteria for your choice of store?” 44 Carries everything I need 39 38 Close by 37 26 Offers lowest prices 44 21 Accepts my bank or credit cards 12 17 Is a store brand I trust 13 14 Carry high-quality brands 6 11 Fantastic customer service 8 Has a shopping environment that reflects who I am 3 10 Spenders (People shopping more) Savers (People shopping less) (%) 0 10 20 30 40 50 issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  12. 12. page 12 Retailers and value perceptions go hand-in-hand When asked which brands best communicate value to them, most consumers think of major retailers like Walmart and Target. Walmart continues to be the most popular value brand, with 14% of shoppers listing the retailer. Retailers are increasingly expected to be seen as value brands. But others like Apple, Sony, and Kellogg's — which are generally not the lowest price products — are communicating value through the quality and familiarity of their brands. Brands That Communicate Value ? = “Still thinking about value, please list all brands that communicate value to you.” 18 AUG 10 14 (%) NOV 10 Indicates significant difference from previous quarter at 95% confidence level 9 8 4 6 4 6 4 6 5 5 5 5 cars/ food/ clothing/ cosmetics/ accessories/ electronics beverage/ stores 5 shoes toiletries parts brands 5 Johnson & Kraft (2) Levi’s Johnson(2) Toyota Sony(1) Walmart (1) 5 (2) (2) 5 Nike Colgate Honda Apple(3) Kellogg’s Target (2) (1) (1) (1) 4 (na) 5 Lee Crest Ford(3) Dell (2) Campbell’s Costco(na) (na) (na) (na) 4 5 Italics indicate previous month’s ranking. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  13. 13. page 13 C-Store fear factors – freshness, quality, selection In general, most shoppers place heightened importance on issues regarding food quality and product variety/selection when choosing convenience stores. Along gender lines, women are more concerned about safety and quality food options, whereas men are more likely to say they don’t care as long as the store is convenient and trustworthy. Furthermore, male shoppers will avoid a c-store because of poor staff quality, limited selection, or long lines. Younger shoppers (18–24 years of age) differentiate convenience stores by the exterior appearance, sense of personal security, and selection of healthy food options. Because a convenience store is supposed to be, by definition, convenient, this same younger shopper will avoid a c-store because of a confusing layout or difficulty getting to the store. Above other factors, convenience-store shoppers primarily look at product selection and food quality when selecting between different retailers and store locations. Higher income ($75K+) shoppers are more sensitive to parking and product selection than lower-income groups. Female shoppers are increasingly becoming a more important segment for the c-store channel and are attracted when stores offer a sense of security; clean store environment; fresh, high-quality food; and special promotions. Reasons to Seek-out or Avoid a Specific C-Store Location “Please select the top three factors that would cause you to avoid visiting a specific convenience store location?” ?= “Please select the top three factors that would cause you to seek out a specific convenience store location?” -54 Fresh or quality food selection 39 -55 Product selection 41 -6 None of these, don't care 18 -34 Parking 22 -35 Store appearance 25 -28 Safety 19 -29 Customer service 28 -20 Other 10 Advertisements/special promotions 33 Quality store chain 29 -27 Difficulty getting to store Reasons to Avoid DEC (%) Reasons to Seek Out issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research
  14. 14. page 14 The Integer Group® ( is M/A/R/C® Research is a brand development firm one of America’s largest promotional and retail dedicated to helping clients create, evaluate, and marketing agencies and a key member of the strengthen their brands. Our teams design and execute TBWAMarketing Services portfolio. The Integer qualitative and quantitative, traditional and online Group resides At the Intersection of Branding solutions while adhering to a client-service ethic built on and Selling® and creates strategic marketing being easy to work with and delivering what is promised. solutions for clients in categories that include Our core competency is measuring attitudes and beverage, packaged goods, telecommunications, behaviors to accurately explain and predict market share, fast food, home and shelter, and power sports. revenue, and bottom line impact of a client’s actions. We Join Integer® in a conversation on shopping help our clients address consumer, channel, and B2B culture and brand strategy at: marketing issues to launch better products and services, attract and retain valuable customers, and build stronger brands. Our proven, marketing-issue focused solutions contact: The Integer Group support clients’ brand building efforts. Craig Elston Sr. VP, Insight & Strategy 7245 West Alaska Drive Lakewood, CO 80226 contact: M/A/R/C Research tel +1.303.393.3474 Randy Wahl EVP, Advanced Analytics 1660 North Westridge Circle Irving, TX 75038 tel +1.972.983.0436 The Checkout is based on a nationally representative survey of 1,200 U.S. adults conducted monthly by M/A/R/C Research. Please contact us to learn more about the data we collect or additional analysis. ©2010 by The Integer Group ® and M/A/R/C ® Research. All rights reserved. The data contained in this report may be reproduced in any form as long as the data is cited from The Integer Group and M/A/R/C Research. issue 2.10 powered by The Integer Group ® and M/A/R/C ® Research