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Budget Shopper - US - October 2010

The official announcement that the recession came to an end in June 2009 seems out of sync with the reality of most Americans still feeling the effects of the downturn. Reflecting an enduringly recessionary mindset, a majority of consumers continue to say that they are budgeting their money more than they did a year ago. This report takes a comprehensive look at consumers’ budget shopping attitudes and behaviors.

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

  • An overview of key economic measures driving budget shopping
  • Insight into consumers’ own perceptions of their budgeting behavior and the motivations behind it
  • An analysis of how retailers across channels are shifting their strategies to cater to more frugal consumers and insight into how budget shoppers approach each of these channels
  • A look at innovators and innovations in the budget shopping space
  • Insight into consumers’ increasing acceptance of store brands

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Consumer Expenditure Survey
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Reasons for budget shopping persist
                        • Belt tightening continues despite “end” of recession
                          • Strict budgeting slips in favor of opportunistic savings tactics
                            • Budget shoppers shop a variety of retail outlets
                              • Deal shopping the norm in supermarkets
                                • After effort to expand base, Walmart refocuses on core shopper
                                  • Target shifts strategy to address everyday needs
                                    • Kmart, with layaway and new private label, appeals to ‘smart’ shoppers
                                      • Bulk sizes and treasure-hunt bargains drive warehouse club members
                                        • Leading higher-end department stores adjust and stabilize
                                          • Kohl’s outpaces value department store competition
                                            • Discount stores offer unique finds
                                              • Store brands have gained market share and lost much of their stigma
                                                • “Extra” money spending increases, saving declines
                                                • Insights and Opportunities

                                                  • Playing the coupon game
                                                    • Upward mobility
                                                      • Dads, the new budget shopping frontier?
                                                      • Inspire Insights

                                                          • Trend: Guiding Choice
                                                          • Market Drivers

                                                            • Key points
                                                              • Consumer sentiment wavers as downturn persists
                                                                • Figure 1: University of Michigan Consumer Sentiment Index, March 2007-September 2010
                                                              • Unemployment and underemployment remain high
                                                                • Unemployment is higher post-recession
                                                                  • Figure 2: U.S. national unemployment rate, January 2008-September 2010*
                                                                • Older workers continue to work
                                                                  • Figure 3: Selected labor force measures, not seasonally adjusted, by age, February 2010
                                                                • Fewer teenagers take summer jobs
                                                                  • Figure 4: Employment-population ratios for young men and young women aged 16-19 years, summer 1948–summer 2009
                                                                • Consumer prices rise minimally
                                                                  • Figure 5: Consumer Price Index, all items, January 2008-September 2010*
                                                                • Inflation-adjusted median household income at 10-year low
                                                                  • Figure 6: Median household income in inflation-adjusted dollars, 1999-2009
                                                                • Consumer expenditures slip in 2009
                                                                  • Figure 7: Average consumer unit* annual expenditures, by item, 2007-09
                                                              • Innovations and Innovators

                                                                • Going mobile: Shopping apps gaining momentum
                                                                  • Shopping gets (more) social
                                                                  • Year-Over-Year Budgeting Trends

                                                                    • Key points
                                                                      • Who says the recession is over? Belt tightening continues
                                                                        • Figure 8: Trended year-over-year budgeting trends, by total, July 2008-July 2010
                                                                      • Women more likely to report budgeting more
                                                                        • Figure 9: Year-over-year budgeting trends, by gender, July 2010
                                                                      • All ages budgeting more
                                                                        • Figure 10: Year-over-year budgeting trends, by age, July 2010
                                                                      • Higher-income consumers’ budgets stabilize
                                                                        • Figure 11: Year-over-year budgeting trends, by household income, July 2010
                                                                      • Blacks, Hispanics more likely to be budgeting more
                                                                        • Figure 12: Year-over-year budgeting trends, by race/Hispanic origin, July 2010
                                                                      • Food and energy prices continue to prompt more budgeting
                                                                        • Figure 13: Trended year-over-year reasons for budgeting more, by total, July 2008-July 2010
                                                                      • Job losses hit men harder, prompting more budgeting
                                                                        • Figure 14: Reasons for budgeting more, by gender, July 2010
                                                                      • Lifestage dictates motivations for budgeting
                                                                        • Figure 15: Reasons for budgeting more, by age, July 2010
                                                                      • Different rationales for budgeting exist across income groups
                                                                        • Figure 16: Reasons for budgeting more, by household income, July 2010
                                                                    • Creating the Budget and Watching for Sales

                                                                      • Key points
                                                                        • What’s the deal? Strict budgeting slips in favor of opportunistic savings
                                                                          • Figure 17: Creating the budget and watching for sales, by total, July 2008-July 2010
                                                                          • Figure 18: Creating the budget and watching for sales, by household income, July 2010
                                                                        • Internet, email gain as coupon sources, traditional sources hold steady
                                                                          • Figure 19: Household coupon sources, by total, 2005-2009/10
                                                                      • Where Consumers Shop

                                                                        • Key points
                                                                          • Budget shoppers flock to supercenters and dollar stores
                                                                              • Figure 20: CPG shopping penetration, by retail channel, 2009-10
                                                                              • Figure 21: Average CPG purchase occasions per household, by retail channel, 2009-10
                                                                            • Women’s store choices reflect a focus on family needs—and fashion
                                                                                • Figure 22: Stores shopped, by gender, July 2010
                                                                              • Higher-income consumers spread the wealth
                                                                                  • Figure 23: Stores shopped, by household income, July 2010
                                                                                • Budget shopping strategies vary by retail channel
                                                                                    • Figure 24: Retail channel budgeting behavior, July 2010
                                                                                • Grocery Store Budgeting Behaviors

                                                                                  • Key points
                                                                                    • Deal shopping the norm in supermarkets
                                                                                      • Figure 25: Grocery store/supermarket budgeting behavior, by gender, July 2010
                                                                                    • Younger supermarket shoppers a target for mobile shopping apps
                                                                                      • Figure 26: Grocery store/supermarket budgeting behavior, by age, July 2010
                                                                                    • Shoppers at all income levels look for deals in supermarkets
                                                                                      • Figure 27: Grocery store/supermarket budgeting behavior, by household income, July 2010
                                                                                  • Walmart Budgeting Behaviors

                                                                                    • Key points
                                                                                      • After effort to expand base, Walmart refocuses on core shopper
                                                                                        • A reversal in the works
                                                                                          • Walmart shoppers look for low price
                                                                                            • Figure 28: Walmart Rollback television ad, 2010
                                                                                            • Figure 29: Walmart budgeting behavior, by age, July 2010
                                                                                            • Figure 30: Walmart budgeting behavior, by household income, July 2010
                                                                                        • Mass Merchandiser Budget Behaviors

                                                                                          • Key points
                                                                                            • Target shifts in favor of everyday needs
                                                                                                • Figure 31: Target back to school television ad, 2010
                                                                                                • Figure 32: Target khakis television ad, 2010
                                                                                              • Kmart, with layaway and new private label, appeals to ‘smart’ shoppers
                                                                                                • Target and Kmart shoppers look for sale items first
                                                                                                  • Figure 33: Mass merchandiser budgeting behavior, by age, July 2010
                                                                                                  • Figure 34: Mass merchandiser budgeting behavior, by household income, July 2010
                                                                                              • Warehouse Club Budgeting Behaviors

                                                                                                • Key points
                                                                                                  • Bulk sizes and treasure-hunt bargains lure club members
                                                                                                    • Clubs appeal to affluent shoppers
                                                                                                      • Warehouse club members economize with bulk purchases
                                                                                                        • Figure 35: Warehouse club budgeting behavior, by household income, July 2010
                                                                                                    • Higher-end Department Store Budgeting Behaviors

                                                                                                      • Key points
                                                                                                        • Leading chains adjust and stabilize
                                                                                                          • Opportunities beyond price
                                                                                                            • Macy’s local strategy pays off
                                                                                                              • Nordstrom revamps website to deliver service
                                                                                                                • Department store shoppers check sale items first
                                                                                                                  • Figure 36: Higher-end department store budgeting behavior, by gender, July 2010
                                                                                                                  • Figure 37: Higher-end department store budgeting behavior, by household income, July 2010
                                                                                                              • Value Department Store Budgeting Behaviors

                                                                                                                • Key points
                                                                                                                  • Kohl’s delivers consistent value
                                                                                                                      • Figure 38: Kohl’s “Style’s Story” television ad, 2010
                                                                                                                    • Online kiosks to help Kohl’s complete the sale in the store
                                                                                                                      • Younger shoppers especially attuned to prices and promotions
                                                                                                                        • Figure 39: Value-priced department store budgeting behavior, by age, July 2010
                                                                                                                    • Discount Store Budgeting Behaviors

                                                                                                                      • Key points
                                                                                                                        • Never pay retail: discount stores offer deals on unique finds
                                                                                                                          • Discount stores synonymous with sales
                                                                                                                            • Figure 40: Discount store budgeting behavior, by age, July 2010
                                                                                                                            • Figure 41: Discount store budgeting behavior, by household income, July 2010
                                                                                                                        • Shopping for Food and Household Items

                                                                                                                          • Key points
                                                                                                                            • Shoppers employ a variety of tactics to save on food and household items
                                                                                                                              • Women are still tops in budget shopping, but men are making gains
                                                                                                                                • Figure 42: Food and household items shopping budgeting behavior, by gender, July 2010
                                                                                                                              • Younger shoppers search for sales and compare price online
                                                                                                                                • Figure 43: Food and household items shopping budgeting behavior, by age, July 2010
                                                                                                                              • Bargain shopping mentality cuts across income levels
                                                                                                                                • Figure 44: Food and household items shopping budgeting behavior, by household income, July 2010
                                                                                                                            • Store Brands

                                                                                                                              • Key points
                                                                                                                                • Store brands gain stature and share in recession
                                                                                                                                  • Most opt for store brands at least some of the time
                                                                                                                                    • Store brands appeal to younger shoppers
                                                                                                                                      • Figure 45: Private label shopping behavior, by age, July 2010
                                                                                                                                    • Lower-income shoppers also more likely to buy store brands
                                                                                                                                      • Figure 46: Private label shopping behavior, by household income, July 2010
                                                                                                                                  • Life’s Little Extras: How “Leftover” Funds are Spent

                                                                                                                                    • Key points
                                                                                                                                      • Money to spare—and spending it
                                                                                                                                        • Dining out still tops the list for extra money
                                                                                                                                          • Figure 47: Year-over-year extra money spending behavior, by total, July 2008-July 2010
                                                                                                                                        • Men and women agree on extra spending, mostly
                                                                                                                                          • Figure 48: Extra money spending behavior, by gender, July 2010
                                                                                                                                        • Different priorities for extra money at different lifestages
                                                                                                                                          • Figure 49: Extra money spending behavior, by age, July 2010
                                                                                                                                        • Upper middle income group drives discretionary purchases
                                                                                                                                          • Figure 50: Extra money spending behavior, by household income, July 2010
                                                                                                                                        • Asians an opportunity for marketers of discretionary products and services
                                                                                                                                          • Figure 51: Extra money spending behavior, by race/Hispanic origin, July 2010
                                                                                                                                      • Cluster Analysis

                                                                                                                                          • Saving to Spend
                                                                                                                                            • Characteristics
                                                                                                                                              • Opportunity
                                                                                                                                                • Essential Budgeters
                                                                                                                                                  • Characteristics
                                                                                                                                                    • Opportunity
                                                                                                                                                      • Barely Budgeting
                                                                                                                                                        • Characteristics
                                                                                                                                                          • Opportunity
                                                                                                                                                            • Cluster characteristics
                                                                                                                                                              • Figure 52: Budget shopper clusters, July 2010
                                                                                                                                                              • Figure 53: Reasons for budgeting more, by budget shopper clusters, July 2010
                                                                                                                                                              • Figure 54: Stores shopped, by budget shopper clusters, July 2010
                                                                                                                                                              • Figure 55: Food and household items shopping budgeting behavior, by budget shopper clusters, July 2010
                                                                                                                                                              • Figure 56: Creating the budget and watching for sales, by budget shopper clusters, July 2010
                                                                                                                                                              • Figure 57: Extra money spending behavior, by budget shopper clusters, July 2010
                                                                                                                                                            • Cluster demographics
                                                                                                                                                              • Figure 58: Budget shopper clusters, by gender, July 2010
                                                                                                                                                              • Figure 59: Budget shopper clusters, by age, July 2010
                                                                                                                                                              • Figure 60: Budget shopper clusters, by household income, July 2010
                                                                                                                                                              • Figure 61: Budget shopper clusters, by race/Hispanic origin, July 2010
                                                                                                                                                            • Cluster methodology
                                                                                                                                                            • Custom Consumer Groups

                                                                                                                                                              • Moms more likely than dads to say they are budgeting more this year
                                                                                                                                                                • Figure 62: Year-over-year budgeting trends, by gender and presence of children in the household, July 2010
                                                                                                                                                              • Reasons for budgeting more consistent across gender/presence of kids
                                                                                                                                                                  • Figure 63: Reasons for budgeting more, by gender and presence of children in the household, July 2010
                                                                                                                                                                • Kids drive parents to more stores
                                                                                                                                                                    • Figure 64: Stores shopped, by gender and presence of children in the household, July 2010
                                                                                                                                                                  • Kids motivate strict budgeting
                                                                                                                                                                    • Figure 65: Creating the budget and watching for sales, by gender and presence of children in the household, July 2010
                                                                                                                                                                • Appendix: Other Useful Consumer Tables

                                                                                                                                                                    • Figure 66: Year-over-year budgeting trends, by number of children in household, July 2010
                                                                                                                                                                    • Figure 67: Stores shopped, by age, July 2010
                                                                                                                                                                    • Figure 68: Walmart budgeting behavior, by gender, July 2010
                                                                                                                                                                    • Figure 69: Mass merchandiser budgeting behavior, by gender, July 2010
                                                                                                                                                                    • Figure 70: Value-priced department store budgeting behavior, by gender, July 2010
                                                                                                                                                                    • Figure 71: Value-priced department store budgeting behavior, by household income, July 2010
                                                                                                                                                                    • Figure 72: Discount store budgeting behavior, by gender, July 2010
                                                                                                                                                                    • Figure 73: Private label shopping behavior, by gender, July 2010
                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                  Companies Covered

                                                                                                                                                                  • Amazon North America
                                                                                                                                                                  • Best Buy stores (USA)
                                                                                                                                                                  • BJ's Wholesale Club, Inc
                                                                                                                                                                  • Bloomingdale's
                                                                                                                                                                  • Circuit City (US)
                                                                                                                                                                  • Consumer Electronics Association
                                                                                                                                                                  • Costco Wholesale Corporation
                                                                                                                                                                  • Darden Restaurants Inc.
                                                                                                                                                                  • Dillard's, Inc
                                                                                                                                                                  • Dominick's Finer Foods
                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                  • Food Marketing Institute
                                                                                                                                                                  • Gallup Organization, The
                                                                                                                                                                  • Grocery Manufacturers Association (GMA)
                                                                                                                                                                  • J C Penney Company, Inc
                                                                                                                                                                  • Kmart Corporation
                                                                                                                                                                  • Kohl's Corporation
                                                                                                                                                                  • Kraft Foods Inc. (U.S.A.)
                                                                                                                                                                  • Macy's, Inc.
                                                                                                                                                                  • National Association of Chain Drug Stores (NACDS)
                                                                                                                                                                  • National Council of Chain Restaurants (NCCR)
                                                                                                                                                                  • National Retail Federation (NRF)
                                                                                                                                                                  • Nordstrom
                                                                                                                                                                  • Peapod
                                                                                                                                                                  • Safeway Inc
                                                                                                                                                                  • Saks Incorporated
                                                                                                                                                                  • SAM's Club
                                                                                                                                                                  • Sears Holdings Corporation
                                                                                                                                                                  • Target Corporation
                                                                                                                                                                  • The Kroger Co.
                                                                                                                                                                  • The New York Times Company
                                                                                                                                                                  • The TJX Companies
                                                                                                                                                                  • The Wet Seal, Inc
                                                                                                                                                                  • Trader Joe's Company Inc
                                                                                                                                                                  • Twitter, Inc.
                                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                                  • U.S. Bureau of the Census
                                                                                                                                                                  • University of Michigan, The
                                                                                                                                                                  • Vera Wang
                                                                                                                                                                  • Walmart Stores (USA)
                                                                                                                                                                  • Women's Wear Daily (WWD)
                                                                                                                                                                  • Zappos.com Inc.

                                                                                                                                                                  Budget Shopper - US - October 2010

                                                                                                                                                                  £3,199.84 (Excl.Tax)