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NEW YORK -- The American shoppers' mindset has dramatically shifted since 2001 toward more anxiety and less spending, reflecting a new "Never Normal" environment they now live in, according to the latest "How America Shops" 2006 study from retail marketing consultancy WSL Strategic Retail, based here.
WSL Strategic Retail's 10th bi-annual, national consumer study is based on interviews with 950 consumers (760 women, 190 men age 18 to 70). It marks the dawning of what veteran retail consultants Wendy Liebmann and Candace Corlett call a "Never Normal" retail decade in which shoppers seek safety and security in their day-to-day lives as well as in their shopping life.
Shoppers, the study said, are anxious, cautious, and calculatingly price-conscious, and have reduced their spending across most key indicator categories.
The good news for grocers, however, is that pet supplies (plus 19), food (plus 18), and prescription medications (plus 18) were the only three of 14 leading indicator categories to show substantial net increases in spending over the previous year.
Overall spending is down, while the frequency and variety of shopping trips holds steady. The retail landscape has reached a state of total saturation, and service has re-emerged as a leading consumer demand and loyalty driver, according to the research.
"Post 911, consumers found themselves in a 'New Normal' retail landscape, as we reported in 'How America Shops 2004,' but today they reel in a 'Never Normal' world rife with unrelenting shocks that range from corporate scandals, war and tsunamis, to Katrina, seesawing oil prices, and who knows what comes next," said Liebmann, WSL Strategic Retail founder and principal. "They anxiously wait for whatever may come next and shop accordingly."
Reacting to these uncertain times, women reduced spending across six key expenditure categories. "Shopping," the sole category to show a net spending increase (plus 6), included purchases made on necessities, such as food, medicine, and pets. Meanwhile spending fell sharply for discretionary categories like cosmetics, fragrance, and home décor.
For the last decade the concept of "shopping democracy" defined the American retail experience, but no more, according to WSL Strategic Retail. While anxiety impacts all income groups in this Never Normal decade, a growing gulf has emerged between where affluent and lower-income consumers shop. For the first time in years, how much money a shopper has defines where she or he shops.
"Throughout the '90s and into early 21st century, consumers of all income levels shopped most retail channels," said Liebmann. "Wal-Mart drove this phenomenon by educating low-income shoppers that they were entitled to name brands at low prices every day. Then Target taught them they were entitled to great design at low prices everyday. At the same time, higher-income shoppers stretched their dollars by shopping at discount and club channels.
"But today most shop where they can best afford things, without undue temptation. It's almost like a return to the '80s when those with more money shopped at premium-price retailers and those with less shopped lower-priced outlets," Liebmann added.
Retailers can no longer expect to gain shoppers in the coming years, according to the study. Retail reach has been maximized, which requires retailers to focus on building frequency and transaction size. Until 2006, many channels, including the supercenter, warehouse club, dollar store, and the Internet, consistently attracted a broader base of shoppers year-to-year, but no longer. When WSL Strategic Retail asked where consumers had shopped in the last 90 days (a key benchmark), there was little growth since 2004 in the percentage of people shopping any channel.
How America Shops studies have shown building loyalty has moved beyond price, product, and location. Emotional factors, such as "a good place to spend time browsing" and a place that "attracts customers I feel comfortable around," now play a key role.
But in a Never Normal world, what matters most to shoppers today is "service with respect," the study finds.
"Service with respect has become the foundation on which store loyalty stands," said Corlett. "Women want bargains, to accomplish a lot in one trip, and interesting items, but if the level of service and respect is found wanting, none of that matters."