- Amid reports of a ho-hum holiday season, you really have to wonder about current consumer mindset. After a strong turnout Black Friday weekend, Hurricane Sandy hit, we witnessed tragedy in Sandy Hook, while those on Capitol Hill literally left us hanging on the fiscal cliff. Retailers continued to give consumers what they really wanted – deals, deals, and more deals – but ultimately it appears that practicality and a focus on needs were at the forefront of consumers’ thoughts as we approached December 25. To top everything off, NBC revealed record ratings for its Christmas Eve showing of It’s a Wonderful Life…coincidence? Perhaps not.
- We at BIGinsight tallied up all of the votes in the lively “Hot or Not?” segment for the whole of 2012 to see which of the 145 trends, personalities, and events really got consumers (Adults 18+) buzzing last year. And while items like holiday shopping online and the New Apple iPad landed high in the rankings, the top 10 list points to consumers focused more on what really matters:
- #10 NFL (Sep-12)*
Football: America’s new favorite pastime? With its top ten ranking, the NFL is certainly giving Major League Baseball (Apr-12, #46) a run for its money. The Giants-Patriots match-up for Super Bowl XLVI (Jan-12, #19) finished within the top 20 this year; however, it was the Packers-Steelers bout in Super Bowl XLV that took top honors in this list back in 2011.
#9 New Apple iPad (Mar-12)
At #9, Apple’s third iteration of its popular iPad was the top tech gadget we polled in 2012, while the more recent releases of the Apple iPad Mini (Nov-12, #25) and Kindle Fire HD (Oct-12, #27) – which sparked the great tablet debate – ranked lower in our list overall.
#8 London Summer Olympic Games (Jul-12)
Fresh off of 2011’s royal wedding, the British invasion of sorts continued for Americans in 2012 with the London Olympic Games. Ranking higher than any other athletes on our lists, swimming superstars Michael Phelps (Aug-12, #21) and Ryan Lochte (Aug-12, #36) proved that they were certainly the pride of the yanks.
#7 Farmers’ Markets (Jul-12)
Perhaps it’s because they offer fresh fare or maybe it’s their “shop small” charm, but at #7, Farmers’ Markets were hit among consumers getting back to the basics this year, though Community Gardens (Aug-12, #81) and Gluten-free Diets (Jul-12, #106) didn’t rank quite so highly.
#6 2012 Presidential Election (Sep-12)
While those of us residing in the swing states couldn’t wait for the endless barrage of phone calls, mailers, and commercials to end, this year’s Presidential Election was certainly very important to all who exercised their right to vote.
#5 Coupons (Jun-12)
Indicative of a consumer group prioritizing budgeting, practicality, and – most importantly – saving money, Coupons scored a top five position in this year’s list. Note to retailers and manufacturers: keep ‘em coming in 2013.
#4 Voting (Nov-12)
You lose your right to complain when you don’t exercise your right to vote…right? Whether their candidate won or lost the election, Americans set precedence on voicing their opinions this year.
#3 “Made in America” Products (Jan-12)
While they may be few and far between, at #3 on our list, “Made in America” Products seem to be what consumers prefer. Or perhaps it’s logical reasoning for boosting our sagging unemployment rate…
#2 Holiday Shopping Online (Dec-12)
Arguably one of the few bright spots for retailers over the past holiday season (gift cards were pretty popular as well), shopping online – whether via a traditional computer/laptop or a mobile device – just clicked with consumers this year. With free shipping offers abound, gift givers were able to skip crowded malls, long checkout lines, and stock-outs in favor of cruising the web for the big bargains, competitive pricing, and compelling customer reviews from the comfort of their couches. However, with Holiday Shopping in Stores (Dec-12) landing at #15, it appears that plenty of Santas still preferred to shop the old fashioned way.
#1 Thanksgiving (Nov-12)
While the Black Friday shopping tradition is increasingly encroaching on the fourth Thursday of November, consumers are seemingly taking a stand on the Thanksgiving holiday, placing it atop our list this year. (Giving Thanks was #2 last year.) It’s a Wonderful Life, right?
* The month/year each item was asked is denoted in parenthesis (MMM-YY).
Holiday 2012 has been an interesting selling season. Consumers are cautiously optimistic, planning to spend slightly above what they did in 2011, though the economy / unemployment are still troublesome and the fiscal cliff could still turn out to be the Grinch who stole Christmas. Undoubtedly, though, the shining star of the season has been the resurgence of gift cards.
While gift cards have been perennially touted as the perfect last-minute gift, a look at this year’s insights shows us that gift card buying patterns are shifting. For 2012, consumers aren’t waiting until Christmas Eve for these purchases; they are checking them off their lists much sooner. According to the National Retail Federation, nearly one-third (32.6%) of Black Friday Weekend* shoppers made a gift card purchase, up a whopping 40% from a year ago (23.1%). Further, as of the first week of December, holiday shoppers overall continue to pace ahead of previous years’ buying habits; two out of five (39.2%) have already purchased these stored-cash cards as gifts this season, up 25% from 2011 (31.4%).
So is 2012 shaping up to be the Year of the Gift Card? You betcha. So let’s take a look at three reasons why gift cards are a “must buy” among holiday shoppers this year.
1. We want gift cards – badly.
While they have been atop consumers’ wish lists since 2007, intent to buy gift cards sputtered during the recession as consumers reached for bargain merchandise that wouldn’t quite reveal the total dollar amount paid. This year, though, a record number of consumers are requesting them (59.8%, much higher than the second most request gift – apparel and accessories – at 49.1%), and a record number of shoppers are responding that they are planning to buy them (59.2%, nearly eclipsing the most purchased category – again apparel and accessories – at 59.7%).
Bonus: Buying a gift card spares the giver and receiver from that awkward “here’s the receipt for the return” exchange.
2. Gift cards are still practical gifts.
Gift cards may be tempting this year because they can still be perfectly practical, which is on what the near majority of consumers are remaining focused in this uncertain economy. Recipients can buy what they want or what they need – and either way, it’s money well spent on behalf of the giver and better than a sweater relegated to the back of someone’s closet, no? Shoppers may have a little extra cash in their pockets this year, but if they are going to spend their hard-earned (and hard-saved) pennies, they’ll do it wisely. And remember, a $50 gift card to a discounter might be one man’s (or woman’s) groceries at Target but another’s new home décor from Tar-Zhay.
Bonus: And speaking of sweaters, gift cards are one-size-fits-all, so no worrying about whether or not Aunt Clara really did lose that 10 lbs. this year when debating between a medium and a large [oy].
3. We can buy gift cards “on sale.”
Back in the day (so…five years ago), buying a $50 gift card meant that the purchaser would fork over $50 cash. And these days, with retailers and restaurateurs bending over backward to bring customers through their doors, it seems that incentives to buy gift cards are becoming increasingly creative as well as prevalent. Nowadays, a $100 gift card might come with a $20 bonus to use later (Merry Christmas to me, right?) Or, and this is one of the examples I saw a few times during my Black Friday exploits, a pack of five $20 gift cards might be discounted 20% to $80. Gift card purchasers may also be receiving more indirect incentives to purchase, such as grocery stores offering frequent shopper / fuel rewards or salons giving away coupon books for future services with gift cards purchases.
Bonus: Shop wisely and gift cards purchases can still come with that “you’ll-never-guess-what-I-paid-for-it” cachet, which was the feel good saying among holiday shoppers during the recession.
So are gift cards changing the way we approach shopping for holiday gifts? Certainly. However, when and if gift exchanges turn into gift card exchanges, I’ll bet we’ll see a renaissance of more traditional gift giving.
* “Black Friday Weekend” is defined as Thursday (Thanksgiving), Friday (Black Friday), Saturday, and Sunday.
This month’s Consumer Snapshot is ready! The video below is a concise look at a few trending topics for the month of December, designed to give you a BIG picture view of current consumers.
Here’s a brief overview of what we’re seeing from consumers in December 2012:
- Will the fiscal cliff prove to be the Grinch who stole Christmas? Confidence backs down two points from November.
- While the official unemployment rate registered at 7.7% for November,this doesn’t seem to be quite the hiring miracle consumers were hoping to see this season.
- After the buying bonanza that was Black Friday and Cyber Monday, consumers’ penchant for practicality rises in December.
- It appears that along with trimming the tree this month, consumers will also be trimming their budgets.
- Walmart versus Kohl’s is a toss-up this month in Women’s Clothing.
- Amazon.com climbs to record customer share in Electronics.
- It’s a frosty 90 Day Outlook with spending plans looking downward from Nov-12, Dec-11.
- What’s Hot? Holiday shopping…online.
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© 2012, Prosper®
BIGinsight™ is a trademark of Prosper Business Development Corp.
I’ve been making a list, checking it twice, storing it in my mobile device…and clearly singing as I do so. Nearly 3 in 10 (29.7%) Mobile Users say they do the same—minus the singing. However, according to Prosper Mobile Insights™, the most popular merry mobile activity among smartphone and tablet users is taking pictures (85.0%), so get ready for all the Instagram notifications! The majority also plan to check the weather and keep in touch with loved ones they won’t get to see for the holidays, thanks to mobile making it so easy to share every holiday moment with those near and far.
Top mobile holiday activities are similar across genders, and there really isn’t much of a battle between men and women when it comes to spreading holiday cheer via technology. Women win the title of “Cheermeister” on nearly all mobile activities analyzed. From sharing holiday experiences through social media, to looking for holiday recipes and even purchasing products, Female Mobile Users appear more likely than their male counterparts to get merry with mobile this year:
Click here to access the complimentary Mobile InsightCenter™ and see all of the holiday mobile activities!
Women are also much more prone than men to use their smartphones and tablets for discovering new decorating ideas, keeping track of upcoming holiday events (thank you Google calendar for reminding me where I need to be all the time!) and keeping gift lists. If you are like me, that gift list doesn’t just say “shirt for brother” – it lists the brand, color, size, special fit and perhaps even a photo so you can just show a store associate and quickly locate what you need.
Speaking of shopping…searching for gifts, stores and deals is another hot holiday activity to accomplish via mobile among both men and women, along with purchasing products. To find out more about how Mobile Users prefer to make mobile purchases, be sure to check out our latest release: Browsers/Apps More Popular than Swipe/Tap Method for Mobile Holiday Purchasing, according to Prosper Mobile Insights™
Source: Prosper Mobile Insights™ Mobile Survey, NOV-12, N=333
© 2012, Prosper®
Shopping on Black Friday made me feel old this year.
Not because we actually began shopping on Thursday. Not because I’ve been scouting out the doorbusters, deep discounts, and special sales for close to 20 years. But because the general make-up of the bargain hunting crowds really seemed to shift this year. After heading out at 8PM on Thanksgiving, it seemed like we were met by a sea of tweens and teens. Before I knew it, my friend and I were muttering phrases like “Where are your parents?” and “Don’t you have a curfew?”
The progressively earlier store openings for the “Black Friday” bonanza of shopping has apparently lent itself to a whole new group of shoppers. Instead of the traditional early birds setting their alarms clocks for 3AM Friday and trudging to the stores half asleep, younger night owls are increasingly appearing, hopped up on coffee and seemingly eager to do “something” after Thanksgiving dinner. While the Black Friday Weekend* insights released by the National Retail Federation (conducted by BIGinsight™) don’t include the tweenagers with which we shared the stores this year, it’s still interesting to take a look at some of shopper shifts among the 18+ age groups that we’re witnessing with the age-old Black Friday shopping tradition.
Younger Crowds Own the Thanksgiving Shopping Trend. Among Black Friday Weekend shoppers who checked out the deals on Thanksgiving Day (in-store or online), the percentage of 18-34 year olds increased a whopping 30% over a year ago. That compares to just an 8% rise among those 35 to 54 and 9% with the 55 and over crowd. So, while we know that shopping on Turkey Day is a rising trend, it’s clearly one driven by a younger demographic.
Merry Christmas to Me. Yes Virginia – this is the season of giving – but with doorbuster deals like $8 dollar coffee pots, who can resist the one-for-you, one-for-me mantra? Practical consumers are increasingly embracing the idea of “self-gifting” at the holidays, buying items for themselves at discounts typically not seen throughout the rest of the year. And these self-centric Santas were certainly out en masse last weekend: eight out of ten Black Friday Weekend shoppers reported that they had taken advantage of retailers’ online and in-store promotions to buy non-gift items. This figure rose to 86% among 18 to 34 year olds, while those 35 to 54 (81%) and 55+ (72%) showed more restraint [well, kind of].
18-34 Year Olds Found Deals via Friendlier Outlets. There’s something that screams “tradition” to a Black Friday bargain hunter when that 20 pound newspaper – chock full of those delicious retailer ads – lands on the front porch on Thanksgiving morning…am I right? Surprising as it may seem in the digital age, the majority of consumers (50%) looked to advertising circulars as their source for Black Friday Weekend sales, discounts, and promotions this year, followed by retailer emails (36%), online searches (30%), retailers’ websites (23%), and TV advertising (also 23%).
Talk to an 18 to 34 year old, though, and you’ll get a different picture. While these youngsters still gobbled up the deals via ad circulars (39%), they were nearly twice as likely to find a friendly discount via Facebook (31%) compared to the general Black Friday Weekend shopping population (16%). Additionally, 18 to 34 year olds were more likely to learn about promotions directly from family and friends (30%), eclipsing those who sought out TV advertising (26%).
* “Black Friday Weekend” is defined as Thursday (Thanksgiving), Friday (Black Friday), Saturday, and Sunday.
For more insights on the holiday season, visit the NRF’s Holiday Headquarters.
While several major retailers, including Walmart, Kmart, and Toys R Us, have lowered or eliminated their layaway fees in efforts to spur holiday shopping, new insights from the BIGinsight™ November survey of more than 9,000 consumers reveal that this tactic doesn’t seem to be leading to a rise in this place-it-on-hold-and-pay-over-time purchase behavior. Just over one in ten holiday shoppers (12.3%) indicates they are using or planning to use layaway when shopping for gifts this season, relatively unchanged from one year ago (12.7%).
With a flatlining number of consumers boarding the layaway train for 2012, it appears that this Great Depression-era policy is more bygone gimmick rather than a modern day marvel. However, further analysis of layaway users uncovers a specific type of holiday shopper. So without further ado, let’s take a look at ten characteristics that help identify this special group of consumers.
Ten Characteristics of Layaway Shoppers
1. Layaway shoppers wouldn’t place in a Santa look-a-like contest. Nearly 75% more likely to have children in the household compared to average holiday shoppers, while layaway users might be more prone to play Santa this year for the kiddos, they just won’t look like the jolly old guy. Six years younger on average than typical holiday shoppers, layaway-ers are also far less likely to refer to themselves as “retired.”
2. Despite tighter budgets, layaway-ers intend to spend more this holiday season. As might be expected, those utilizing the budget-friendly aspects of layaway tend to earn less (about $49,000 per year) than holiday shoppers in general ($56,000/year). Despite this, though, two out of five (41.6%) layaway shoppers intend to spend “more” on the holiday season this year than they did back in 2011. Just 21.0% of shoppers in general are working within expanded holiday budgets this year.*
3. Layaway shoppers have a holly jolly outlook for the economy… Consumers reported that they were feeling better about the economy in November, but the sentiment among layaway users is downright giddy: 54.7% say they are very confident/confident in chances for a strong economy, much higher than typical holiday shoppers (40.4%). The issue of employment, though, is another story. About a third (32.7%) of layaway shoppers fears an increasing in the number of layoffs over the next six months, higher than holiday shoppers in general (22.0%). Layaway-ers are also slightly more concerned about becoming laid off themselves.
4. …Yet remain conservative with their everyday finances. Lower average incomes and greater concerns for layoffs are likely playing into layaway shoppers’ penchant for scrimping and saving in their everyday lives. Compared to holiday shoppers in general, more layaway-ers are making plans to pay down debt (38.6%), decrease overall spending (35.4%), and increase their savings (32.5%) over the next three months. Additionally, a higher proportion (28.6%) is attempting to pay with cash more often, which brings us to point #5…
5. Cold hard cash is key with layaway shoppers. For holiday purchases specifically, while debit cards are the preferred method of payment among layaway shoppers (49.9% plan to use them most often), more than a third of (35.5%) still plans to utilize cash most often, 40% higher than holiday shoppers in general (25.2%). Layaway shoppers are 60% less likely to use credit cards most often for holiday purchases than typical holiday shoppers.*
6. These early birds are getting the worms… Arguably one of the brightest benefits of using layaways services is the ability to place a hold on hot holiday merchandise before it flies off the shelves. So it shouldn’t come as a surprise that – as of early November – seven out of 10 layaway users (69.1%) had begun their holiday shopping as opposed to just 52.8% of holiday shoppers in general.*
7. …But still plan to bargain-hunt with the best of ‘em on Black Friday. And speaking of early bird tendencies, layaway shoppers are quite the night owls too: the majority (56.3%) is planning to shop Black Friday weekend, making them 75% more likely to brave the crowds than typical holiday shoppers (31.5%).*
8. Layaway shoppers use their connections to find best deals. While traditional advertising circulars are their top source for keeping track of holiday sales and promotions, layaway shoppers are more likely to connect on Facebook or Twitter, use retailer apps, and refer to coupon websites (i.e. RetailMeNot.com, FatWallet.com) compared to holiday shoppers in general.*
9. While they embrace their inner fashionistas, it’s electronics and toys that are bound for the layaway bins. While layaway shoppers are more likely to lean to familiar fashion labels and the newest trends/styles versus holiday shoppers in general, apparel is less likely to be put on hold compared to electronics and toys.
10. Discounters are most likely to get those layaway dollars. When it comes to the retailers shoppers are utilizing for layaway services, discounters score a definitive win here. Nearly two-thirds (65.5%) of holiday shoppers planning to use layaway this season will head to Walmart, while 42.2% say they will sign up with Kmart. Fewer will make use of the programs at Toys R Us (21.2%), Sears (15.2%), Burlington Coat Factory (12.4%), Marshall’s (12.1%), or TJ Maxx (9.9%).
* Source: National Retail Federation/BIGinsight™. For more insights on the holiday season, visit the NRF’s Holiday Headquarters.
This week, the National Retail Federation announced their 2012 holiday forecast, predicting that sales will rise 4.1% over 2011 to $586.1 billion. The sales growth is expected to be slightly higher than the 10-year average holiday sales increase (3.5%), though pacing below last year’s growth (5.6%). With holiday shoppers gearing up for spending, let’s take a look at the “state of the consumer” as we head into this all-important selling season for retailers:
Confidence is UP, but Feelings are Volatile. In the BIGinsight September monthly survey of more than 9,000 consumers, 38% indicated that they were very confident or confident in chances for a strong economy. This was a high reading for 2012 and a vast improvement over the September 2011’s 23%, when consumers were still reeling from the debt crisis. Confidence is riding a four-point upswing from August to September, but don’t look for this indicator to continue to improve at this pace – 2012 has been a rollercoaster ride for sentiment and continued fluctuation is expected headed into Q4.
The outcome of the “fiscal cliff” drama on Capitol Hill remains big question mark for the sustainability of confidence – as well as holiday sales. Should we fall off that precipice – and realize an average 2013 tax bill increase of $3500 – holiday budgets are bound to shrink. Adding to the precarious position of the economy? Our continuously weak job market. And the upcoming Presidential election also adds to the uncertainty.
Frugality is a Fixture in Consumer Finances. Along with the relatively robust increase in consumer confidence in September, we also witnessed similar increases in those focused on practical purchasing and buying just the necessities. In fact, both indicators are in line with what we saw a year ago, when confidence was just 23%. So yes, Virginia, despite the more positive outlook for the economy, consumers are still being very cautious with what they spend – even as we look forward to the holiday shopping season.
Expect holiday shoppers to stick to budgets, avoid impulse buys, continue smart shopping strategies, such as couponing, sales/promotions, and comparison shopping, as gift-buying commences. Frugality continues to be the name of the game with consumers because they know the economy isn’t “fixed.” Paying down debt and reducing spending remain fiscal priorities headed into the final three months of 2012, while plans to increase savings reached a six-year September high last month, so it appears that consumers may be preparing for holiday shopping as well as those everyday unknowns.
Pricing uncertainty in key areas, like grocery, gas, and apparel, continues to be of concern with consumers. An increasing number of shoppers are relying on their credit cards more compared to September 2011 when purchasing such staples – so we are still seeing signs of struggling consumers. (i.e. Holiday ’12 won’t herald a season of “recovery.”)
However, if it can be avoided, shoppers won’t make this Christmas on credit. Year over year, fewer are paying off just the minimum monthly balance on their cards, while we’ve seen a slight rise in those carrying $0 average monthly balances. The past four years have been a tough road for consumers, but they do appear to be focusing on not falling back into the lax spending/savings patterns that got them into a mess back in 2008.
Consumers Know They Have the Upper Hand with Retailers. Can we call this retail transparency? The rising popularity of mobile devices has taken much of the mystery out of shopping for customers holding a smartphone or tablet. They can compare prices, check availability, and even click “buy” from virtually wherever they are located, and shoppers will work all angles – online, instore, mobile, social media, coupon sites, direct mail, email, and ad circulars – to make sure that their holiday spending remains on budget. It’ll be a spending game that consumers want to win.
However, we know that all retailers can’t compete on low price alone [I’m looking at you, Best Buy.] Great customer service and personal rapport with shoppers will be key in driving traffic to retailers who aren’t low-price providers. Product selection, availability, and brand assortment – something department stores having really honed in on in the past few years – will also serve to turn shoppers’ heads this season. “Cheap is chic” is SO 2008; today’s shoppers want value and are willing to pay a little more for quality – as long as they can use a coupon.
Early each month, we release our Executive Briefing – complimentary topline insights from our latest Monthly Consumer Survey of more than 8,000 consumers.
And, we’ve just released our latest edition for July. Here’s what you may have missed:
- Economic sentiment perked up from June, though consumers failed to set off any fireworks compared to years past. This month’s reading (32.8%) looks a little stagnant when placed in longer-term perspective – and well below Jul-07’s pre-recession figure of 47.8%.
- Workers show signs of concern for personal job security. 4.2% admitted they were anxious about becoming laid off, up from last month as well as one year ago.
- With the campaign season about to hit full throttle, consumers seem to be bracing for the onslaught of political propaganda. Overall, though, consumers seem a little less apprehensive this Presidential go-around they did during the 2008 McCain vs. Obama election. Plus: how would you score in a Presidential Pop Quiz?
- The uptick in consumer confidence this month may be leading a few shoppers off the practicality platform. Before you start thinking “spending rebound,” though, keep this in mind: practicality remains well above the sensible shopping tendencies we witnessed before the Great Recession.
- July pump price prediction: $3.49/gal, 25 cents below the forecast for the end of June ($3.75/gal). For more on this topic: Pain at the Pump: Who (or What) is Controlling Pump Prices?
- A bit of Christmas cheer might be in store for retailers: one in ten says they plan to spend more on gifts this year, up from 6.5% in Jul-11.
- Was JC Penney’s Fair & Square strategy a gift to Macy’s in Women’s Clothing? For the sixth consecutive month, Macy’s bests JC Penney in this category, though Kohl’s and Walmart continue to lead overall.
- In the well-documented Shoe Wars, one retailer is M.I.A. in July. Yes, that’s right (and you heard it here first)…JC Penney (now #6) has been bounced from the Top 5 by Foot Locker.
- 90 Day Outlook: Back-to-School (i.e. Children’s Clothing) looks to be a bright spot in consumers’ spending plans. However, with the majority of categories facing DOWNward compared to June, revenues may fizzle instead of sizzle as we make our way through summer.
- What’s Hot? Farmers’ fresh fare beats out Spider-Man, Dark Knight.
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And, to view the latest BIG Executive Briefing in its entirely: July 2012.
Source: BIGinsight™ Monthly Consumer Survey – JUL-12 (N = 8509, 7/2 – 7/9/12)
© 2012, Prosper®
BIGinsight™ is a trademark of Prosper Business Development Corp.
As we recently reported in our April BIG Executive Briefing, two in five consumers (39.8%) say they plan to decrease overall spending over the next three months…that was April’s top financial priority, dethroning the usual intent to pay down debt (34.7% in Apr-12).
Forty percent actively attempting to curtail their expenditures is a big number. So big, in fact, that we’ve only approached this figure three times in the past SEVEN years. Researching this a bit further, it was pretty easy to tie a piece of history to each of the three previous peaks: Hurricane Katrina, the Summer ’08 Record High Gas Prices, and Holiday ’08 (see chart below, but don’t strain your brain…I’ll break it down in a second). Because two of these three events had at least a little something to do with pump prices, I added in the average price per gallon of gas during the week of our survey collection, as reported by the U.S. Energy Information Administration.
Now, let’s break this down historically:
Hurricane Katrina: When this natural disaster slammed into the Gulf states in Aug-05, we were all affected nationwide. New Orleans, et al were literally adrift, slow response times left victims with prolonged suffering [*coughs* FEMA], and price per gallon of gas soared to $3 [ah, $3/gal…how I miss thee]. By September, consumers were responding with their spending sentiment: 40.0% were planning to decrease overall expenditures. As you can see in the chart though, as pump prices edged back downward, consumers backed off this conservative fiscal mantra.
Summer ’08 Gas Price Highs: According to the AAA Daily Fuel Gauge Report, pump prices hit an all-time high on July 17, 2008, at $4.114/gal. By now we were also in the belly of the recession, and 39.2% of consumers reacted with plans for spending cutbacks. And though gas prices bottomed-out by Holiday 2008, consumer spending plans didn’t respond in kind #thankyoubankfailures
Holiday ’08: It’s safe to say that the Holiday 2008 shopping season was a disaster. The severe spending cutbacks that materialized with shoppers were not anticipated by retailers, who were left deeply discounting the massive amounts left on their store shelves pre- and post-holiday. More than two in five consumers (42.9%) rang in New Year 2009 with resolutions to decrease overall spending, a record high. So – obviously – it’s not always gas prices that ignite spending cutbacks among consumers…sometimes, you can blame it on a recession.
Furthering the point that pump prices aren’t always that culprit, when the cost of fueling up topped off at over $4/gal last May, drivers didn’t have a fiscal knee-jerk reaction. While at the time consumers were bracing for a $4.25/gal price by Memorial Day ’11, that never materialized and plans to decrease overall spending continued to fluctuate in a relatively [new] “normal” 30% to 35% range.
So what’s different this year? Average gas prices have crossed that $4/gal threshold again, and 39.8% have responded with plans to cut back. Have consumers just had enough? Are they tired of dealing with pump prices in addition to the inflating price tags on apparel, food, and other household items? Are they not willing to tap into their hard-earned savings to cover the additional costs of fueling up? Are they hedging on a response [or lack thereof] from Capitol Hill?
At any rate I think it’s safe to say that if gas prices don’t cool off as summer heats up, retailers might be in for a spending drought.
For more information on this data, please contact BIGinsight™.
Like the timeline infused with BIG data? Be sure to sign up for complimentary access to our Vital Signs InsightCenter™, an advanced platform for the visualization and delivery of insights and answers on how consumers in the U.S. are reacting to key economic events. It illustrates how consumers feel about the economy, changes they make in their lives in reaction to the economic situation, and how their personal financial and spending plans are affected by key events. It goes beyond traditional point-in-time data reports to trended insights in one easy-to-use, decision-ready format.
Source: BIGinsight™ Monthly Consumer Survey – APR-12 (N = 8724, 4/3 – 4/10/12)
© 2012, Prosper®
BIGinsight™ is a trademark of Prosper Business Development Corp.
For the final BIG Call of 2011, we presented new Holiday Insights (as reported here by the National Retail Federation) as well as 13 month snapshots for Consumer Confidence, Employment Outlook, Practical Purchasing, and Personal Finances.
Consumer Confidence: It’s been a bumpy ride this year, but consumers are closing out 2011 with nearly the same perspective on confidence in a strong economy as they did 365 days ago. There’s still a long way to go, though, before consumers begin to have warm and fuzzy feelings about the economy again.
Employment: Although the official U.S. unemployment rate reached a two year low in November, consumers have a nearly identical outlook for the job market now as they did at the end of 2010. Concern for the job market is still very real, which will play into the decisions consumers make in 2012 regarding their debt, savings, and spending as well as who they plan to vote for in the upcoming Presidential election.
Practicality: While consumers feel roughly the same way that they did headed into 2011, times over the past 13 months have been tougher, yet they’ve been better, too. Cautious spending will likely stick around in the New Year.
Personal Finances: Paying down debt and decreasing overall spending remain the top financial goals, but the importance of increasing savings is growing as we close 2011. It looks like consumers will begin 2012 with a more fiscally conservative mindset than they did for the start of 2011.
Holiday: Fewer consumers have completed holiday shoppers compared to this time last year. As of the first week of December, one in three shoppers either hadn’t started yet or has completed less than 10% of their purchases. Since displacing credit cards in 2005, debit cards continue as the most popular payment method for the holiday season. It appears that consumers do seem to be continuing to make a conscious effort to stay off the credit cards and stay on budget.
To listen to the recorded webinar, click here.
© 2011, Prosper®
BIGinsight™ is a trademark of Prosper Business Development Corp.