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JUMPS IN GAS AND GROCERIES LEAD TO SLUMPS IN RETAIL
The surge in gasoline and grocery costs drove consumers to abandon full price retail stores during the past month. America’s Research Group's Consumer Mind Reader ™ survey found that shoppers preferred discount retailers and stores selling home improvement products and auto parts instead.
Membership warehouse clubs in particular benefitted from the twin spikes in prices at the pump and in supermarkets. The average sales in warehouse clubs reversed a decline began in March of this year. Spending levels were up significantly over last year's November survey as consumers rushed to take advantage of one-stop discount shopping.
The Consumer Mind Reader is conducted six times a year and reflects the opinions of 1,000 shopping decision makers across the country.
The belt tightening brought on by higher prices also resulted in stronger sales in home improvement and auto parts stores as consumers obviously felt the need to repair their homes and cars themselves rather than pay for the service.
The list of retail categories showing declines from 2007 levels in both number of shoppers and average sales was very long when compared with those showing gains. Of the 27 categories we study for the Consumer Mind Reader, 17 of them showed declines. The unfortunate ones included high ticket items like furniture and jewelry down to everyday needs like apparel and shoes. No full price retail category was immune from the assault.
Bed and bath stores took an especially hard hit during the month. Only one in 10 shoppers made purchases in bed and bath stores last month, their lowest market share since the fall of 2005. As another sign of bad news for bed and bath, average purchases were only about half what they were in 2006.
Specialty retailers of musical instruments and toys also took it on the chin as consumers held on to their bucks to pay for the essentials.
Clearly the reaction that we've seen in the last month means retailers will have to reexamine their strategies for the final Christmas sales push. Business as usual simply won't work this year. Families just don't have the disposable income to pay full price for a lot of unnecessary items.
The majority of retailers in America now find themselves in the situation of having to depend on fourth quarter sales earnings to make or break their year. Only the retailers who recognize that consumers are demanding quality products at good, competitive prices will have a jolly time in 2007.
BIG WINNERS
- Membership Warehouse Clubs
- Discount Stores
- Discount Apparel Stores
- Auto Parts Stores
- Home Improvement Stores
- Toy Stores
- Jewelry Stores
- Bed and Bath Stores
- Musical Instrument Stores
- Department Stores
Britt Beemer, founder and chairman of America’s Research Group, is the country's leading authority on retail buying habits of consumers. ARG tracks consumer buying habits more than any other survey research firm in the nation. The company conducts customized surveys for retail and manufacturing clients across the United States, designed to provide clients valuable marketing recommendations to grow their businesses. Beemer is author of two best-selling business books, Predatory Marketing and It Takes a Prophet to Make a Profit. He is currently working on a third business book, to be entitled The Customer Rules. More detailed information is available on the America's Research Group website at www.americasresearchgroup.com