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Budget Shopper - US - October 2009

The current recession didn’t so much start a trend toward budget shopping as intensify one already in place. While belt tightening has been an ongoing process in recent years, the motivations for it have shifted considerably in the past 12 months as the recession has deepened and turmoil in the financial markets has played out. The spiking commodity and fuel prices of 2007 and 2008 have subsided, giving way to rising unemployment, declining real income, lower home values and loss of retirement savings. Even as the economy begins to show signs of stability in late 2009, it has become apparent that budget shopping will be the reality for a majority of Americans for years to come.

Based on exclusive Mintel consumer research examining budget shopping in detail, this report provides:

  • Insight into the motivations behind budget shopping

  • An exploration of key budget shopping behaviors, both overall and within specific retail channels

  • An overview of what retailers across channels are doing to respond to budget shoppers, and recommendations on what they should be doing

  • Insight into the growing popularity of store brands

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Abbreviations and terms
            • Abbreviations
              • Terms
              • Executive Summary

                • Reasons for budget shopping continue to accumulate
                  • Most consumers continue to tighten their belts
                    • Strict budgeting still less prevalent than opportunistic money-saving tactics
                      • Supermarkets benefit from home dining, stronger private labels
                        • Shopping at Walmart becoming a universal budgeting behavior
                          • Other mass merchants struggle to strike the right recessionary tone
                            • Warehouse clubs balance stock-up basics with treasure hunt
                              • High-end department stores resort to discounts and sales
                                • Value-priced department stores hold their own
                                  • Discount stores receive a recession-induced boost
                                    • Clothing shoppers cutting back and bargain hunting
                                      • Shoppers only slightly less likely to seek out deals on personal hygiene
                                      • Insights and Opportunities

                                        • Break the discount mentality
                                          • Focus on value, not just price
                                            • The promise of private label
                                              • Multi-channel integration
                                              • Inspire Insights

                                                • Premium and Cutthroat
                                                  • Implications
                                                    • The Time Bubble Bursts
                                                      • Implications
                                                      • Market Drivers

                                                        • Key points
                                                          • Belt tightening continues as the reasons for it accumulate
                                                            • Consumer confidence
                                                                • Figure 1: Conference Board Consumer Confidence Index, January 2008-Aug 2009
                                                              • Unemployment rate
                                                                • Figure 2: U.S. national unemployment rate, January 2007-August 2009*
                                                              • Real household income
                                                                • Figure 3: U.S. real median household income, by race and Hispanic origin, 1967-2008
                                                              • Home values
                                                                • Figure 4: U.S. existing home sales, median price, 2006-09
                                                              • Consumer prices
                                                                • Figure 5: Graph of Consumer Price Index, all items, January 2007-August 2009*
                                                                • Figure 6: Consumer Price Index, all items, January 2007-August 2009*
                                                                • Figure 7: Consumer Price Index, food at home, January 2007-August 2009*
                                                                • Figure 8: Consumer Price Index, food away from home, January 2007-August 2009*
                                                                • Figure 9: Consumer Price Index, motor fuel, January 2007-August 2009*
                                                                • Figure 10: Consumer Price Index, household energy, January 2007-August 2009*
                                                            • Year-Over-Year Budgeting Trends

                                                              • Key points
                                                                • A majority of consumers continue to tighten their belts
                                                                  • Figure 11: Year-over-year budgeting trends, by gender, July 2009
                                                                • Adults of all ages budgeting more
                                                                  • Figure 12: Year-over-year budgeting trends, by gender, July 2009
                                                                • Increased budgeting prevalent at all income groups
                                                                  • Figure 13: Year-over-year budgeting trends, by household income, July 2009
                                                                • Larger families require more budgeting
                                                                  • Figure 14: Year-over-year budgeting trends, by number of children in household, July 2009
                                                                • Hispanic households slightly more likely to tighten the budget
                                                                  • Figure 15: Year-over-year budgeting trends, by race/Hispanic origin, July 2009
                                                                • Respondents cite a variety of reasons for tighter budgeting
                                                                  • A few notable differences between genders
                                                                    • Figure 16: Reasons for budgeting more, by gender, July 2009
                                                                  • Lifestage strongly influences motivations for budgeting
                                                                    • Figure 17: Reasons for budgeting more, by age, July 2009
                                                                  • Different budgeting concerns exist across income levels
                                                                    • Figure 18: Reasons for budgeting more, by household income, July 2009
                                                                • Creating the Budget and Assessing Sales

                                                                  • Key points
                                                                    • Budget vs. Bargain
                                                                      • Coupon use on the rise, especially online
                                                                        • Women lead in most budget-shopping tactics, but men may be gaining
                                                                          • Figure 19: Creating the budget and assessing sales, by gender, July 2009
                                                                        • Older adults quicker to clip
                                                                          • Figure 20: Creating the budget and assessing sales, by age, July 2009
                                                                        • Lower income adults budget more, clip less
                                                                          • Figure 21: Creating the budget and assessing sales, by household income, July 2009
                                                                      • Where Consumers Shop

                                                                        • Key points
                                                                          • Shoppers include more stores in their hunt for value
                                                                              • Figure 22: Average purchase occasions per household, % change vs prior year, 2009
                                                                            • Women more likely to shop in more outlets
                                                                                • Figure 23: Stores shopped, by gender, July 2009
                                                                              • Higher income shoppers shop in more stores
                                                                                • Figure 24: Stores shopped, by household income, July 2009
                                                                            • Grocery Store Budgeting Behaviors

                                                                              • Key points
                                                                                • Supermarkets benefit from home dining, but still face heavy competition
                                                                                  • Developing and promoting private labels
                                                                                      • Figure 25: Safeway private label TV spot, 2009
                                                                                    • Editing and optimizing assortment
                                                                                      • Everyday low prices
                                                                                        • Figure 26: Safeway Everyday Low Prices TV spot, 2009
                                                                                      • Grocery shoppers utilize a wide array of budget-shopping behaviors
                                                                                        • Figure 27: Retail channel budgeting behavior, by gender, July 2009
                                                                                        • Figure 28: Grocery store/supermarket budgeting behavior, by gender, July 2009
                                                                                      • Coupon use higher among older shoppers
                                                                                        • Figure 29: Grocery store/supermarket budgeting behavior, by age, July 2009
                                                                                    • Walmart Budgeting Behaviors

                                                                                      • Key points
                                                                                        • Shopping at Walmart popular across demographic groups
                                                                                          • Walmart’s impact felt across retail industry
                                                                                            • Walmart promises empowerment to budget-conscious consumers
                                                                                              • Figure 30: Walmart annual savings TV spot, 2009
                                                                                            • Walmart shoppers look for sales and low prices
                                                                                              • Figure 31: Walmart budgeting behavior, by age, July 2009
                                                                                              • Figure 32: Walmart budgeting behavior, by household income, July 2009
                                                                                          • Mass Merchandiser Budgeting Behaviors

                                                                                            • Key points
                                                                                              • Target struggles to strike the right recessionary tone
                                                                                                  • Figure 33: Target high expectations household products TV spot, 2009
                                                                                                  • Figure 34: Target high expectations fall fashions TV spot, 2009
                                                                                                • Kmart gains ground by focusing on the basics
                                                                                                  • Figure 35: Kmart Back to School Layaway TV spot, 2009
                                                                                                • Mass merchant shoppers focus on sale items
                                                                                                  • Figure 36: Mass merchandiser budgeting behavior, by gender, July 2009
                                                                                                  • Figure 37: Mass merchandiser budgeting behavior, by age, July 2009
                                                                                                  • Figure 38: Mass merchandiser budgeting behavior, by household income, July 2009
                                                                                              • Warehouse Club Budgeting Behaviors

                                                                                                • Key points
                                                                                                  • Clubs offer blend of budgeting and bargains
                                                                                                    • BJ’s wins with hybrid strategy
                                                                                                      • Warehouse clubs cater to affluent customers
                                                                                                        • Club members go for bulk
                                                                                                          • Figure 39: Warehouse club budgeting behavior, by household income, July 2009
                                                                                                      • Higher-end Department Store Budgeting Behaviors

                                                                                                        • Key points
                                                                                                          • Discounting becomes the norm
                                                                                                            • Challenges great at the highest end, where need is the new want
                                                                                                              • Macy’s
                                                                                                                • Nordstrom moves multi-channel
                                                                                                                  • Higher-end department store shoppers look for sales
                                                                                                                    • Figure 40: Higher-end department store budgeting behavior, by age, July 2009
                                                                                                                    • Figure 41: Higher-end department store budgeting behavior, by household income, July 2009
                                                                                                                • Value-priced Department Store Budgeting Behaviors

                                                                                                                  • Key points
                                                                                                                    • Value-priced chains hold their own in tough economy
                                                                                                                      • Kohl’s gets aggressive
                                                                                                                        • Figure 42: Kohl’s smart shopper TV spot, 2009
                                                                                                                      • JCPenney stays in the game
                                                                                                                        • Positioned for an online shopping future
                                                                                                                          • Shopping sale items dominate behavior in value-priced department stores
                                                                                                                            • Figure 43: Value-priced department store budgeting behavior, by age, July 2009
                                                                                                                            • Figure 44: Value-priced department store budgeting behavior, by household income, July 2009
                                                                                                                        • Discount Store Such as T.J. Maxx, Ross, Marshalls Budgeting Behaviors

                                                                                                                          • Key points
                                                                                                                            • Discount stores receive a recession-induced boost
                                                                                                                              • Figure 45: T.J. Maxx & Marshalls Intervention TV Spot, 2009
                                                                                                                            • Both budget and bargain shopping at discount stores
                                                                                                                              • Figure 46: Discount store budgeting behavior, by age, July 2009
                                                                                                                              • Figure 47: Discount store budgeting behavior, by household income, July 2009
                                                                                                                          • Shopping for Clothing

                                                                                                                            • Key points
                                                                                                                              • Clothing shoppers cutting back and bargain hunting
                                                                                                                                • Retail sales results point to shoppers trading down
                                                                                                                                  • Women more likely to look for bargains
                                                                                                                                    • Figure 48: Clothing shopping budgeting behavior, by gender, July 2009
                                                                                                                                  • Younger adults far more engaged in apparel shopping
                                                                                                                                    • Figure 49: Clothing shopping budgeting behavior, by age, July 2009
                                                                                                                                  • Bargain shopping not limited to lower incomes
                                                                                                                                    • Figure 50: Clothing shopping budgeting behavior, by household income, July 2009
                                                                                                                                • Shopping for Personal Hygiene

                                                                                                                                  • Key points
                                                                                                                                    • Shoppers only slightly less likely to seek out deals on personal hygiene
                                                                                                                                      • Figure 51: Personal care/hygiene shopping budgeting behavior, by gender, July 2009
                                                                                                                                      • Figure 52: Personal care/hygiene shopping budgeting behavior, by age, July 2009
                                                                                                                                  • Private Label

                                                                                                                                    • Key points
                                                                                                                                      • Private label use a widespread budget-shopping strategy
                                                                                                                                        • Use most prevalent among young, lower-income consumers
                                                                                                                                          • Figure 53: Private label shopping behavior, by age, July 2009
                                                                                                                                          • Figure 54: Private label shopping behavior, by household income, July 2009
                                                                                                                                          • Figure 55: Private label shopping behavior, by race/Hispanic origin, July 2009
                                                                                                                                      • Extra Money

                                                                                                                                        • Key points
                                                                                                                                          • Recession putting the squeeze on extra money
                                                                                                                                            • Dining out gets the nod when there’s extra cash
                                                                                                                                              • Figure 56: Extra money shopping behavior, by gender, July 2009
                                                                                                                                              • Figure 57: Extra money shopping behavior, by age, July 2009
                                                                                                                                          • Cluster Analysis

                                                                                                                                              • Casual Budgeters
                                                                                                                                                • Budget Enthusiasts
                                                                                                                                                  • Crisis Budgeters
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Cluster characteristics
                                                                                                                                                        • Figure 58: Budget shopper clusters, July 2009
                                                                                                                                                        • Figure 59: Year-over-year budgeting trends, by budget shopper clusters, July 2009
                                                                                                                                                        • Figure 60: Clothing shopping budgeting behavior, by budget shopper clusters, July 2009
                                                                                                                                                        • Figure 61: Personal care/hygiene shopping budgeting behavior, by budget shopper clusters, July 2009
                                                                                                                                                        • Figure 62: Creating the budget and assessing sales, by budget shopper clusters, July 2009
                                                                                                                                                        • Figure 63: Extra money shopping behavior, by budget shopper clusters, July 2009
                                                                                                                                                      • Cluster demographics
                                                                                                                                                        • Figure 64: Budget shopper clusters, by gender, July 2009
                                                                                                                                                        • Figure 65: Budget shopper clusters, by age group, July 2009
                                                                                                                                                        • Figure 66: Budget shopper clusters, by household income, July 2009
                                                                                                                                                        • Figure 67: Budget shopper clusters, by race, July 2009
                                                                                                                                                        • Figure 68: Budget shopper clusters, by Hispanic origin, July 2009
                                                                                                                                                      • Cluster methodology
                                                                                                                                                      • Custom Consumer Groups

                                                                                                                                                        • Older males least likely to say they are budgeting more
                                                                                                                                                          • Figure 69: Year-over-year budgeting trends, by gender and age, July 2009
                                                                                                                                                        • Reasons for budgeting vary by gender/age
                                                                                                                                                            • Figure 70: Reasons for budgeting more, by gender and age, July 2009
                                                                                                                                                          • Women over 35 are active money-savers
                                                                                                                                                            • Figure 71: Creating the budget and assessing sales, by gender and age, July 2009
                                                                                                                                                          • Stores shopped vary by gender/age
                                                                                                                                                              • Figure 72: Stores shopped, by gender, July 2009
                                                                                                                                                          • Appendix: Other Useful Tables

                                                                                                                                                            • Discretionary Spending
                                                                                                                                                              • Figure 73: Extra money shopping behavior, by household income, July 2009
                                                                                                                                                              • Figure 74: Extra money shopping behavior, by race/Hispanic origin, July 2009
                                                                                                                                                          • Appendix: Trade Associations

                                                                                                                                                            Companies Covered

                                                                                                                                                            • Albertsons Inc.
                                                                                                                                                            • Aldi (USA)
                                                                                                                                                            • Banana Republic
                                                                                                                                                            • Consumer Electronics Association
                                                                                                                                                            • Dillard's, Inc
                                                                                                                                                            • Facebook, Inc.
                                                                                                                                                            • Food Marketing Institute
                                                                                                                                                            • Greenfield Online
                                                                                                                                                            • Grocery Manufacturers Association (GMA)
                                                                                                                                                            • Grocery Manufacturers of America (GMA)
                                                                                                                                                            • J C Penney Company, Inc
                                                                                                                                                            • Kmart Corporation
                                                                                                                                                            • Macy's, Inc.
                                                                                                                                                            • National Association of Chain Drug Stores (NACDS)
                                                                                                                                                            • National Association of Realtors (NAR)
                                                                                                                                                            • Safeway Inc
                                                                                                                                                            • Sears Holdings Corporation
                                                                                                                                                            • Stop & Shop
                                                                                                                                                            • Supervalu Inc
                                                                                                                                                            • Target Corporation
                                                                                                                                                            • The Conference Board
                                                                                                                                                            • The Kroger Co.
                                                                                                                                                            • Trader Joe's Company Inc
                                                                                                                                                            • U.S. Bureau of Labor Statistics
                                                                                                                                                            • Walmart Stores (USA)

                                                                                                                                                            Budget Shopper - US - October 2009

                                                                                                                                                            £3,174.67 (Excl.Tax)