Consumers Show a Glimmer of Hope, but Economy Still a Concern
Fewer consumers expect to reduce their spending on back-to-school items compared to last year, although economic concerns will continue to weigh on their shopping plans, according to a new survey by Deloitte. Among those surveyed, 64% said they plan to spend less on back-to-school items, compared with 71% in 2008. Four in 10 (43%) say they will cut back their spending by more than $100, down from nearly five out of 10 (48%) last year. “Consumers may be casting a glimmer of hope for retailers, but the survey results indicate that value will top their shopping lists this year,” said Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP. “Although retailers may not see as many wallets snapping shut as they did in late 2008, consumers still plan to stretch their dollars, telling us that that their shopping remains constrained. Retailers should focus on delivering the best incentives and in-store experiences to get the most out of the back-to-school season this year.” Shifting concerns General concerns about the economy (55%) topped the reasons that consumers expect to spend less, followed by high prices for gas (50%), food (50%), and home energy (46%). However, these three inflation-related percentages are down significantly from 2008, when consumers largely attributed their reduced spending to these items. Consumers cited additional reasons for spending less this year, with more than one in five respondents (22%) indicating a loss of job in their household and 17% expressing fears of job loss. Almost one-third (32%) said they are saving more, up 10 percentage points from last year, and one-third (33%) are paying down debt. Those who said the economy was weak or in a recession represented 85% of respondents, down 10 percentage points from last year. Fourteen percent currently believe the economy is starting to recover. Spending with caution With 90% of respondents indicating they will do their back-to-school shopping at discount/value department stores, consumers are continuing to watch their wallets closely. Among other places they will shop, 40% said dollar stores, 29% said office supply stores and 28% said off-price stores. With seven in 10 (70%) of respondents saying that economic conditions will likely impact their shopping behavior, changes include:
- 74% will buy more items on sale
- 65% will buy only what their families need
- 64% will buy more lower-priced back-to-school items
- 55% will use more store coupons
- 45% will shop at different (less expensive) stores than they usually do
In addition, almost one-third (32%) said they would buy more private label brands, and more than one-quarter (28%) will comparison shop online before buying. When asked if they are likely to cut back on specific items, more than eight out of 10 (81%) said they plan to pare back on clothes and almost half (49%) expect to spend less on shoes. Almost one-third (32%) anticipate less going toward supplies and nearly the same amount (30%) intend to spend less on backpacks/book bags. “In today’s tough environment, retailers’ principal marketing strategies should include coupons, sales and loyalty programs,” said Janiak. “And with more than three-quarters of shoppers expecting to do the bulk of their shopping in August, retailers can implement promotions now that may encourage customers to spend a greater share of the back-to-school budget in one place. Campaigns that are both strategic and creative, such as mobile alerts or coupons, can target a specific customer segment, better engage shoppers and build loyalty.” Source: Survey commissioned by Deloitte and conducted online by an independent research company between July 6 and 9, 2009. Website: www.deloitte.com.