Retail Outlook 2009: Younger Shoppers to Spend More

January 16, 2009

This article is included in these additional categories:

Analytics, Automated & MarTech | CPG & FMCG | Financial Services | Retail & E-Commerce | Youth & Gen X

More than two-thirds (69%) of US adults plan to spend less at retailers in 2009 than they did in 2008, but 58% of those ages 18-24 plan to spend the same or more, especially at mass merchants, according to results from the 2009 Consumer Shopping Intentions Study from Cavallino LLC.

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In contrast to the younger age group, nearly 80% of consumers age 35-54 plan to spend less.

The research, which is a follow-up to Cavallino’s annual 2008 Shopping Behavior Study, was undertaken to determine where and how much consumers plan to spend in 2009. Results reveal that even though pundits paint a bleak picture this year for the US economy, there will be significant dollars spent at mass merchants such as Wal-mart and Target, with Walmart leading the way by a large margin, Cavallino said.

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“A new purchasing mindset is in play for 2009,” said John Rittenhouse, chairman of Cavallino LLC. “Consumers aren’t looking for flashy items and they’re a bit anti-luxury, even those in higher tax brackets. By the same token, bigger selection, especially in women’s apparel, will continue to win the day for retailers.”

Rittenhouse sees interest in one-time bargains waning. “Shoppers want consistent value and everyday low prices,” he said. “This is why the Wal-marts and Targets of the world will grab a bigger share of consumer spending in 2009.”

The study also found that while the consumer purchasing mindset has changed and consumers still intend to spend less, shoppers of all ages are reasonably optimistic about this year’s economy. Nearly 63% expect it to improve by the fourth quarter. Only 12% of consumers expect to be worse off in 2009, while almost 90% expect the situation to remain static or get better:

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Consumers Changing Where They Spend

Many consumers report changing where they spent their holiday dollars in 2008, the study found. This is significant, according to Cavallino, because the numbers collected for 2008 will set the tone for shopping in 2009.

Specifically, of the 48% of survey respondents who reported spending less at a specific store:

  • 49% of power retail customers who changed where they shopped shifted to discount stores
  • 40% of department store customers who changed where they shopped shifted to discount stores
  • 37%of mid-line (e.g., JC Penney, Sears) customers who changed where they shopped shifted to discount stores
  • 33% of specialty-store customers who changed where they shop shifted to both department stores and discount stores.

“The state of the US economy has consumers being a bit more judicious as to where they spend their retail dollars,” said Rittenhouse. “Our study reveals that mass merchants will be the primary source for consumers in 2009, while department stores, specialty retailers such as The Gap and Radio Shack, and power retailers such as Best Buy and Toys R Us will receive a smaller slice of the consumer-spending pie.

About the study: The 2009 Consumer Shopping Intentions Study (pdf) was conducted nationwide through random telephone interviews with 815 consumers during the weeks preceding Christmas day. Consumers answered carefully crafted questions designed to show how current economic conditions affected what motivated them to shop, where they shopped and what mattered to them most when making a purchase. All store data was collected by specific store name, catalog or website. The study was underwritten by Cavallino, LLC, designed and managed by The Gordman Group, and conducted by Weise Research Associates.

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