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The Budget Shopper - US - December 2015

The Budget Shopper - US - December 2015

"Several years after the recession, the economy is stronger, and people are beginning to work, to buy and to live more freely again. Unfortunately for retailers looking to make a profit, consumers’ expectations for fair prices have not waned."

- Diana Smith, Senior Research Analyst - Retail & Apparel

This report looks at the following issues:

Consumer confidence is up
Improved confidence does not mean less frugality
Multi-stop path to purchase


OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY
The issues
Figure 1: Personal financial assessment, plans for spending, and US economic outlook, July 2014-September 2015
Figure 2: Budgeting tendency versus prior year, by select demographics, September 2015
Figure 3: Retailers shopped – Also shop at, September 2015
The opportunities
Figure 4: Budgeting actions taken, by select demographics, September 2015
Figure 5: Shopping behaviors, September 2015
Figure 6: Items splurged on, September 2015
What it means
THE MARKET
What you need to know
Consumer confidence is up; more so for personal finances
US population aging and diversifying
Changing family dynamics impact shopping behaviors
Improved economy does not mean wide open purses and wallets
Market perspective
Consumers more confident about personal finances than US economy
Figure 7: Personal financial assessment, plans for spending, and US economic outlook, July 2014-September 2015
Figure 8: Total US value sales, by category ($ billion), 2014
Market factors
America’s population is skewing older
Figure 9: Population, by age, 2010-20
Increasingly diverse American profile
Figure 10: Total US population growth trends, by race/Hispanic origin, 2010-20
Shifts in household dynamics impact how people budget and shop
Figure 11: Household type, by age of householder, 2013
Figure 12: Percent distribution of households across income quintiles, by household type, 2013
Macroeconomic factors reflect consumer optimism
Figure 13: Consumer confidence and unemployment, 2007-October 2015*
KEY PLAYERS
What you need to know
Off-price is the new trend in ‘value’ retailing
Supermarkets and department stores are facing challenges
Retailers need to redefine value beyond merely pricing
What’s working?
Value-oriented brands are thriving
Figure 14: Retailers shopped – Any shopping, by heaviest budget shoppers, September 2015
Off-price retailers provide compelling options to budget shoppers who seek name brands at discounted prices
What’s struggling?
Grocery stores are losing share of household care products
Figure 15: Supermarket share of total sales of household paper products, home laundry products, household surface cleaners, and
dishwashing products, 2012 and 2014
Recent softness seen at department stores
Figure 16: Analysis of department stores shopped for clothing/accessories, September 2014
What’s next?
Subscription services offer savings over the long-term
Access over ownership
“Smarter” shopping options
THE CONSUMER
What you need to know
Every budget shopper is different
Nearly everyone is budgeting the same or more than last year
Budget shoppers are well-informed by the time they’re ready to buy
Even budget shoppers splurge once in awhile
Defining a budget shopper
Is bargain hunting hereditary?
Slicing and dicing
Figure 17: Economic outlook segmentation, percentage by segment, July 2014-September 2015
Figure 18: Budget shopper spectrum based on economic outlook segmentation, July 2014-September 2015
Figure 19: Economic outlook segmentation, general attitudes, July 2014-September 2015
Figure 20: Repertoire of budgeting actions taken, September 2015
Figure 21: Repertoire analysis of heaviest budget shoppers, by select demographics, September 2015
Consumers describe themselves on the spectrum
Budgeting tendencies
Saving for a rainy day
Figure 22: Budgeting tendency versus prior year, September 2015
Millennials are budgeting more
Figure 23: Tendency to save more versus last year, by select demographics, September 2015
Cost of living getting more costly
Figure 24: Reasons for budgeting more, September 2015
Budgeting actions taken
Coupons remain an effective tactic to drive purchase
Figure 25: Budgeting actions taken, September 2015
Personalized deals are becoming an expectation
Figure 26: Shopper attitudes around coupons, January 2014
Consumers explain their actions and state preferences
Retailers shopped
What they say (Top of mind)
What they do (Loyalty)
Figure 27: Retailers shopped, September 2015
Figure 28: Retailers shopped – Any shopping, By Hispanic origin, September 2015
What they love (Brand affinity)
What they accept (Routine)
Shopping behaviors
Consumers are proud of the savings they procure
Figure 29: Shopping behaviors, September 2015
Heaviest budget shoppers more likely to stock up; less likely to splurge
Figure 30: Shopping behaviors, by repertoire of six or more budgeting actions taken, September 2015
Store brand stigma is definitely waning
Figure 31: Percent of those who always or often buy store/private label brands instead of national brands, by select demographics,
September 2015
Role of technology
Actions taken to better manage finances
Consumers are monetizing their time and possessions
Figure 32: Actions taken to improve financial management, September 2015
Younger consumers at all income levels try to improve their finances
Figure 33: Select actions taken to improve financial management, by age and household income, September 2015
Can retailers and brands also morph into financial advisors?
Splurging
Consumers are craving experiences more than ever
Figure 34: Items splurged on, September 2015
Turning splurges into rewards
Figure 35: Items splurged on, by generation, September 2015
Why, when and what budget shoppers splurge on
From the minds of budget shoppers
Budget shoppers reveal what’s important
APPENDIX
Data sources and abbreviations
Data sources
Abbreviations and terms
The market
Figure 36: Percent of consumers with bachelor’s degree or graduate/professional degree, aged 25 or older, by Race, 2014
Figure 37: Median household income, in inflation-adjusted dollars, by Race/Hispanic origin 2004-14
Figure 38: Number of households, 2003-13
Figure 39: Household size, 2003-13
Figure 40: Household size, by race and Hispanic origin, 2013
Figure 41: Median household income, in inflation-adjusted dollars, 2004-14
Figure 42: GDP change from previous period and consumption expenditures, Q1 2007-Q3 2015
Figure 43: Disposable personal income change from previous period, January 2007-September 2015
Figure 44: Personal saving rate, 2007-September 2015
Figure 45: US gasoline and diesel retail prices, all grades and formulations, 2007-October 2015
Figure 46: Homeownership rate in the US, 2007-14
The consumer
Target segmentation
Figure 47: Economic outlook segmentation, by select demographics, July 2014-September 2015
Figure 48: Economic outlook segmentation, events experienced in the last 12 months, July 2014-September 2015
Additional data
Figure 49: Shopping attitudes and coupon usage, July 2014-September 2015
RESEARCH METHODOLOGY
US Research Methodology
Consumer research
Social Media Research
Trade research
Statistical Forecasting

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