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The Budget Shopper - US - December 2015

"Several years after the recession, the economy is stronger, and people are beginning to work, to buy and to live more freely again. Unfortunately for retailers looking to make a profit, consumers’ expectations for fair prices have not waned."

- Diana Smith, Senior Research Analyst - Retail & Apparel

This report looks at the following issues:

  • Consumer confidence is up
  • Improved confidence does not mean less frugality
  • Multi-stop path to purchase

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Consumer confidence is up
            • Figure 1: Personal financial assessment, plans for spending, and US economic outlook, July 2014-September 2015
          • Improved confidence does not mean less frugality
            • Figure 2: Budgeting tendency versus prior year, by select demographics, September 2015
          • Multi-stop path to purchase
            • Figure 3: Retailers shopped – Also shop at, September 2015
          • The opportunities
            • Make it personal
              • Figure 4: Budgeting actions taken, by select demographics, September 2015
            • Be an enabler, not a hindrance
              • Figure 5: Shopping behaviors, September 2015
            • Go beyond price to experience to stay relevant
              • Figure 6: Items splurged on, September 2015
            • What it means
            • The Market – What You Need to Know

              • Consumer confidence is up; more so for personal finances
                • US population aging and diversifying
                  • Changing family dynamics impact shopping behaviors
                    • Improved economy does not mean wide open purses and wallets
                    • Market Perspective

                      • Consumers more confident about personal finances than US economy
                        • Figure 7: Personal financial assessment, plans for spending, and US economic outlook, July 2014-September 2015
                        • Figure 8: Total US value sales, by category ($ billion), 2014
                    • Market Factors

                      • America’s population is skewing older
                        • Figure 9: Population, by age, 2010-20
                      • Increasingly diverse American profile
                        • Figure 10: Total US population growth trends, by race/Hispanic origin, 2010-20
                      • Shifts in household dynamics impact how people budget and shop
                        • Figure 11: Household type, by age of householder, 2013
                        • Figure 12: Percent distribution of households across income quintiles, by household type, 2013
                      • Macroeconomic factors reflect consumer optimism
                        • Consumer confidence and unemployment
                          • Figure 13: Consumer confidence and unemployment, 2007-October 2015*
                        • Gross domestic product and personal consumption expenditures
                          • Disposable personal income
                            • Personal saving rate
                              • Gasoline prices
                              • Key Players – What You Need to Know

                                • Off-price is the new trend in ‘value’ retailing
                                  • Supermarkets and department stores are facing challenges
                                    • Retailers need to redefine value beyond merely pricing
                                    • What’s Working?

                                      • Value-oriented brands are thriving
                                        • Figure 14: Retailers shopped – Any shopping, by heaviest budget shoppers, September 2015
                                      • Off-price retailers provide compelling options to budget shoppers who seek name brands at discounted prices
                                      • What’s Struggling?

                                        • Grocery stores are losing share of household care products
                                          • Figure 15: Supermarket share of total sales of household paper products, home laundry products, household surface cleaners, and dishwashing products, 2012 and 2014
                                        • Recent softness seen at department stores
                                          • Figure 16: Analysis of department stores shopped for clothing/accessories, September 2014
                                      • What’s Next?

                                          • Subscription services offer savings over the long-term
                                            • Access over ownership
                                              • “Smarter” shopping options
                                              • The Consumer – What You Need to Know

                                                • Every budget shopper is different
                                                  • Nearly everyone is budgeting the same or more than last year
                                                    • Budget shoppers are well-informed by the time they’re ready to buy
                                                      • Even budget shoppers splurge once in awhile
                                                      • Defining a Budget Shopper

                                                        • Is bargain hunting hereditary?
                                                          • Slicing and dicing
                                                            • Consumer segmentation
                                                              • Figure 17: Economic outlook segmentation, percentage by segment, July 2014-September 2015
                                                              • Figure 18: Budget shopper spectrum based on economic outlook segmentation, July 2014-September 2015
                                                              • Figure 19: Economic outlook segmentation, general attitudes, July 2014-September 2015
                                                            • Repertoire analysis
                                                              • Figure 20: Repertoire of budgeting actions taken, September 2015
                                                              • Figure 21: Repertoire analysis of heaviest budget shoppers, by select demographics, September 2015
                                                            • Consumers describe themselves on the spectrum
                                                            • Budgeting Tendencies

                                                              • Saving for a rainy day
                                                                • Figure 22: Budgeting tendency versus prior year, September 2015
                                                              • Millennials are budgeting more
                                                                • Figure 23: Tendency to save more versus last year, by select demographics, September 2015
                                                              • Cost of living getting more costly
                                                                • Figure 24: Reasons for budgeting more, September 2015
                                                            • Budgeting Actions Taken

                                                              • Coupons remain an effective tactic to drive purchase
                                                                • Figure 25: Budgeting actions taken, September 2015
                                                              • Personalized deals are becoming an expectation
                                                                • Figure 26: Shopper attitudes around coupons, January 2014
                                                              • Consumers explain their actions and state preferences
                                                              • Retailers Shopped

                                                                • What they say (Top of mind)
                                                                  • What they do (Loyalty)
                                                                    • Figure 27: Retailers shopped, September 2015
                                                                    • Figure 28: Retailers shopped – Any shopping, By Hispanic origin, September 2015
                                                                  • What they love (Brand affinity)
                                                                    • What they accept (Routine)
                                                                    • Shopping Behaviors

                                                                      • Consumers are proud of the savings they procure
                                                                        • Figure 29: Shopping behaviors, September 2015
                                                                      • Heaviest budget shoppers more likely to stock up; less likely to splurge
                                                                        • Figure 30: Shopping behaviors, by repertoire of six or more budgeting actions taken, September 2015
                                                                      • Store brand stigma is definitely waning
                                                                        • Figure 31: Percent of those who always or often buy store/private label brands instead of national brands, by select demographics, September 2015
                                                                      • Role of technology
                                                                      • Actions Taken to Better Manage Finances

                                                                        • Consumers are monetizing their time and possessions
                                                                          • Figure 32: Actions taken to improve financial management, September 2015
                                                                        • Younger consumers at all income levels try to improve their finances
                                                                          • Figure 33: Select actions taken to improve financial management, by age and household income, September 2015
                                                                        • Can retailers and brands also morph into financial advisors?
                                                                        • Splurging

                                                                          • Consumers are craving experiences more than ever
                                                                            • Figure 34: Items splurged on, September 2015
                                                                          • Turning splurges into rewards
                                                                            • Figure 35: Items splurged on, by generation, September 2015
                                                                          • Why, when and what budget shoppers splurge on
                                                                          • From the Minds of Budget Shoppers

                                                                            • Budget shoppers reveal what’s important
                                                                            • Appendix – Data Sources and Abbreviations

                                                                              • Data sources
                                                                                • Consumer survey data
                                                                                  • Consumer qualitative research
                                                                                    • Abbreviations and terms
                                                                                      • Abbreviations
                                                                                        • Terms
                                                                                        • Appendix – The Market

                                                                                            • Figure 36: Percent of consumers with bachelor’s degree or graduate/professional degree, aged 25 or older, by Race, 2014
                                                                                            • Figure 37: Median household income, in inflation-adjusted dollars, by Race/Hispanic origin 2004-14
                                                                                            • Figure 38: Number of households, 2003-13
                                                                                            • Figure 39: Household size, 2003-13
                                                                                            • Figure 40: Household size, by race and Hispanic origin, 2013
                                                                                            • Figure 41: Median household income, in inflation-adjusted dollars, 2004-14
                                                                                            • Figure 42: GDP change from previous period and consumption expenditures, Q1 2007-Q3 2015
                                                                                            • Figure 43: Disposable personal income change from previous period, January 2007-September 2015
                                                                                            • Figure 44: Personal saving rate, 2007-September 2015
                                                                                            • Figure 45: US gasoline and diesel retail prices, all grades and formulations, 2007-October 2015
                                                                                            • Figure 46: Homeownership rate in the US, 2007-14
                                                                                        • Appendix – The Consumer

                                                                                          • Target segmentation
                                                                                            • Facing Challenges
                                                                                              • Financial Nesters
                                                                                                • Economically Indifferent
                                                                                                  • Fiscally Fit
                                                                                                    • Confident Spenders
                                                                                                      • Figure 47: Economic outlook segmentation, by select demographics, July 2014-September 2015
                                                                                                      • Figure 48: Economic outlook segmentation, events experienced in the last 12 months, July 2014-September 2015
                                                                                                    • Additional data
                                                                                                      • Figure 49: Shopping attitudes and coupon usage, July 2014-September 2015

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                                                                                                  The Budget Shopper - US - December 2015

                                                                                                  £2,684.63 (Excl.Tax)