RETAIL IN FREE FALL AS CONSUMERS HUNKER DOWN
The retail economic spiral continues as consumers are universally tightening their belts and eliminating virtually all discretionary spending, according to the latest Consumer Mind Reader ™ survey.
In 30 years of conducting consumer research, I've never seen such dramatic declines in shopping levels. Americans fear the worst from an economy that shows no signs of bottoming out and heading back upward. Clearly they are bracing themselves for a depression.
Of the 1,000 consumers we interviewed for the CMR Survey, more than half reported that they plan to spend less this year than last. Only a fraction predicted that their 2009 spending levels will exceed last year's. We asked shoppers about their buying habits in 28 different retail categories. They reported fewer trips and less spending in 27 of those 28 categories. Only the volume discount membership warehouse clubs escaped the slump experienced by other retailers by showing slight gains in number of shoppers and average spending levels.
Luxury items such as jewelry are obviously victims of the self-imposed freeze on discretionary spending that consumers have initiated, and they cannot weather the storm much longer. A year ago 8.1 percent of consumers reported purchasing jewelry items. In this survey only a half of one percent said they bought jewelry. While not yet in such dire straits, retailers of hardware, apparel, sporting goods and toys all saw empty aisles as less than half of last year's shoppers returned to their stores.
Even discount stores, a category that had fared better than most since the slide began, suffered from the loss of 4.7 percent of their customers over the same time last year, and decreased spending totaling more than $30 per shopping visit.
Consumers are obviously devastated by the rapidly worsening economic calamity and are focused solely on reducing their bills and cutting costs.
They don't see any reason for optimism, and nothing the government or business leaders do seems to boost their confidence. While more than 70 percent are expecting an income tax refund, most predict that the bulk of the refund will be used to pay off bills and credit cards.
The widely publicized stimulus package President Obama signed into law in mid-February has not inspired consumer confidence. Only one in 10 shoppers said they would consider increasing 2009 spending due to the stimulus. More than a third say they will withhold a decision on increased spending until next year and one in four say they won't be spending more until 2011.
Shoppers are as pessimistic as I have ever seen them. Despite the speed of the decline, consumers simply don’t see any quick fixes. They are looking for the light at the end of the tunnel, but in the back of their mind they’re afraid its an oncoming train.
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. His third business book, entitled The Customer Rules, was released in October and is available at bookstores nationwide. More detailed information is available on the America’s Research Group website at www.americasresearchgroup.com