Holiday Retail Outlook, cotton or cashmere

Will it be cotton or cashmere this year? The deciding factor may be the bargains to be had by practical consumers…headed into Holiday ’09, one in four (25.8%) says they only buy clothing on sale, rising 5 points from a year ago (20.4%), when confidence dropped and practicality spiked following the mid-September bank busts. One in ten (11.0%) maintains clothing sales aren’t important (v. 15.3% in ’08), while the majority (63.2%) still “usually” buys on sale.

EDLP = the formula for success for Women’s Clothing shoppers within Walmart…the big discounter continues to lead this category with 12.8% shopping there most often, rising 1+ points from a year ago (11.4%). Kohl’s continues in second place with 10.1% (also rising from 8.6% in ’08), while JC Penney (7.5%), Macy’s (6.6%), and Target (2.9%) round out the Top 5.

The same line-up is seeing success in Men’s Clothing as well: Walmart (16.1%), Kohl’s (9.9%), and JC Penney (8.9%) lead, with all three retailers gaining ground from a year ago. Macy’s (5.5%), Target (3.0%), and Sears (3.0%) follow.

With twice the share of its nearest competitor, Walmart (14.6%) is a proven winner in Children’s Clothing…Kohl’s (6.0%), Target (5.6%), JC Penney (4.4%), and Macy’s (2.4%) complete the Top 5. No surprise here…price (49.8%) most often drives kid’s clothing purchase decisions, followed by selection (33.8%), quality (26.8%), location (24.1%), and availability of sizes (20.1%).

According to this month’s Consumer Migration Index (CMI), two big discounters are positioning themselves for long-term Children’s Clothing gains…the CMI, which tracks those who have immigrated to a store (new customers in the past year) against those who have emigrated (left within the past year), and where a positive rating spells net growth to a retailer, shows that Walmart and Target are gaining new customers with +1.4 and +1.0 ratings, respectively, while JC Penney and Kmart are experiencing customer deficits:

What’s accounting for the surge of consumers from certain stores? 12.6% of fleeing customers cite high prices, while poor selection (5.7%), decline of store appearance (4.1%), poor quality (3.9%), competitor ads (3.4%), and long checkout or dressing room lines (3.4%) were also key culprits.

For the third consecutive month, Walmart remains on track in Shoes…with 12.2% shopping there most often, the big discounter bests discount specialty Payless (10.2%). Kohl’s (5.2%), JC Penney (3.0%), Target (2.4%), and DSW (2.4%) follow.

Toys R Us has launched a “Christmas in July” offensive and Walmart is touting 100 hot toys for under $10…so who will win the big toy battle this holiday season? In October, 21.4% contend they shop Walmart most often for Children’s Toys, rising from 18.7% a year ago, while 15.0% shop second place Toys R Us (declining from 17.7% a year ago). Target (6.4%), Kmart (1.1%), and Amazon (0.6%) follow.

And for “big kid” gifts like HDTVs, netbooks, and other Electronics, expect consumers to head to big box Best Buy and Walmart, where 32.1% and 18.9%, respectively shop most often in October (both rising from ’08)…Target (3.2%), Amazon (2.5%), and Sears (2.0%) follow.

With Halloween candy, Thanksgiving turkey, and holiday ham purchases on the horizon, look for many shoppers to beeline to Walmart, where 16.7% shop most often for Groceries. Traditional grocers Kroger (6.2%), Publix (3.4%), and Safeway (2.9%) follow, while Meijer and Shoprite (tied, with 2.0% each) round out the Top 5.

Walmart maintains a definitive stronghold in Health & Beauty Care…more than one in four (28.5%) shops the discount giant most often for soaps, shampoos, and shaving supplies, more than double that of closest competitors Walgreens (8.7%) and CVS (8.3%). Target (6.2%) and Rite Aid (3.0%) follow.

However, when it comes to filling prescriptions, it’s the druggists who most often aid consumers…Walgreens (15.4%) and CVS (13.3%) continue to lead this category in October. Walmart is a strong third place contender with 11.0% shopping there most often…Rite Aid (5.3%) and Target (2.4%) complete the Top 5.

Future Purchases

Depending on how you interpret the October 90 Day Outlook, results could be a trick or a treat…according to the BIGresearch Diffusion Index (those who say they’ll spend less subtracted from those who’ll spend more), ALL categories have improved from September as well as October 2008 (read: this is the treat). Here’s the trick: recall the terrible sentiment from consumers in post-banking crisis October ’08…it didn’t take much to improve on those figures. Compare the Diffusion Index to a more stable October ’07, and you’ll find that all categories have declined:

Retail Merchandise Categories - 90 Day Outlook
(Oct-09 compared to Sep-09, Oct-08, and Oct-07)

Are high-dollar gifts in peril for Holiday ‘09? There’s good news and bad news to report this month with pricey durables. The good: compared to a month ago, purchase intentions have improved for several popular gift categories, including computers, jewelry, TVs, and digital cameras. The bad? Compared to a year ago (again, post-bank fall-out), these categories have remained flat (computers, digital camera) or declined (jewelry, TVs).

(source: BIGresearch is a consumer intelligence firm providing analysis of behavior in areas of products and services, retail, financial services, automotive and media. More information is available at http://www.bigresearch.com)

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