Consumers Continue Shift to Low-cost Retailers, Acceptance of Store Brands
Sixty-two percent of surveyed shoppers who earn less than $35,000 per year consider themselves worse off than a year ago, and this sentiment ripples through consumers at all income brackets this back-to-school season, according to new research from Chicago-based SymphonyIRI Group Inc.
Other principal findings “SymphonyIRI Group Special Report: Back-to-School 2010,” include the following:
- 69 percent of all respondents are focused on watching spending and saving money.
- 46 percent of households earning more than $100,000 plan to shop more at supercenters, such as Walmart and SuperTarget.
- 58 and 57 percent of all respondents, respectively, are stocking up on items because they are on sale and buying what’s on sale versus their favorite brands.
“The good news corporations are reporting in their Q2 earnings is not translating to consumer confidence,” said Susan Viamari, editor of SymphonyIRI’s Times & Trends. “Even shoppers in higher-income brackets are channel shifting to save money. Typically, lower-income shoppers are most price sensitive and lead in economizing trends. This year, shoppers in households earning $55,000 and more are frequently as aggressive about saving money as other shoppers.”
The cloud hanging over lower-income shoppers extends to higher-earning shoppers as well. Among households earning $35,000 to $55,000, 46 percent consider themselves a little or a lot worse off than last year; 37 percent of shoppers in households earning $55,000 to $100,000 share this sentiment, as do 30 percent of shoppers in households earning more than $100,000.
This lack of confidence manifests itself in shopper purchase patterns. Just over 46 percent of survey respondents are buying a few back-to-school items initially and then filling in later on an as-needed basis. In addition, 42 percent are using back-to-school products left over from last year, and 40 percent are minimizing back-to-school purchases and figuring out how to extend the life of the products they buy.
The tendency to watch spending and save money is the leading factor influencing back-to-school shopping behavior this year, cited by 69 percent of respondents. Even 59 percent of household earnings more than $100,000 are employing this approach. The two other leading factors include less money available due to elevated food costs and concern of financial or job stability.
Store selection clearly reflects price sensitivity, even among households earning more than $100,000. Among these affluent shoppers, 46 percent are visiting supercenters more often. This is very much in line with intentions cited by the general population, where 50 percent of shoppers plan to shop supercenters more frequently. Exactly half of these wealthiest consumers plan to shop more frequently at mass merchandisers, such as Walmart and Kmart as compared to 47 percent of respondents as a whole.
Brand selection also reflects ongoing discipline focused on price. For example, a majority of shoppers (58 percent) are stocking up on lunch box items that are on sale, 57 percent are selecting products guided by what’s on sale versus preferred brands, and 46 percent are planning what to buy before visiting the store.
Store brands continue to remain popular with shoppers of all income levels. When it comes to lunch box options, three-quarters believe store brands are equal to or better than the quality of national brands. Even among households earning more than $55,000, more than two-thirds state the quality of store brands are equal to or better than national brands.
However, manufacturers have an opportunity among more affluent shoppers. At least 31 percent of those earnings more than $55,000 believe store brands have inferior quality to national brands.
While 37 percent of consumers believe their financial situation will be better a year from now versus today, that is up from 31 percent in last December’s SymphonyIRI Economic Update Survey. This more recent survey revealed 19 percent expect their situation to be worse off in a year, down from 23 percent in December’s survey.
In the store brands category, half of Back-to-School 2010 survey respondents note store brand lunch box components and school supplies provide better value versus national brands. However, the survey goes on to note 24 percent of respondents believe national-brand lunchbox items are of better quality versus store brands, while 17 percent of respondents believe that national-brand school supplies are better. These figures signify an opportunity for manufacturers to protect and grow share in these important categories with messages that reinforce quality, consistency and trust available in consumers’ “favorite brands.”
“SymphonyIRI Special Report: Back-to-School 2010” was conducted in July 2010. Results summarize findings from 1,000 completed online interviews, the respondent base reflecting a nationally representative cross-section of American shoppers.
For more information, visit www.SymphonyIRI.com.