NRF Findings: Return of the Conscious Consumer, What They Can’t Live Without
by Christina Lee on February 5th, 2009
Recent studies from the National Retail Federation have announced the return of the conscious consumer, after it adjusted 2008 forecasts in September due to the down economy.
The trade group forecasts for 2009 an overall 0.5 percent decline in retail sales, according to a statement released last Tuesday.
“Most of the consumer behavior we saw in 2008 will continue well into this year,” said Rosalind Wells, chief economist.
By that, the trade group means that retailers may see a 2.5 percent decline during the first half. They may then experience an overall 3.6 percent rise in the fourth quarter, arriving with the holiday season and “a strengthening economy,” according to the forecast.
On Monday, the National Retail Federation then released a survey conducted by BIGresearch, which found what consumers said they could not live without. Some of their indicated priorities and preferences could serve as valuable information for wholesalers and retailers this year:
- The top-ranked commodity of the survey: Internet surveys, with 80.9 percent of respondents guaranteed to spend money on it. Therefore, the upcoming year may not be so bad for online retailers. Internet sales could rise by up to 11 percent, according to Forrester Research.
But a Penn, Schoen and Berland Associates study points to another reason: promised savings. More than two-thirds of respondents purchased something online they otherwise would not have, because of a coupon or discount. With that in mind, retailers may wonder – are the deals going to eventually lead to customer loyalty, or will they all amount to just a quick sales fix? - As Wendy Liebmann, CEO of WSL Strategic Retail, said in the trade group’s full-length report, this year’s consumers may still be wary to use their credit cards. This fear stems from the debt they have built up over last year, which averaged out to $5,710 by December, TransUnion.com reported.
Data collected over the past few months also show that credit card spending has been lowering. After total consumer credit remained flat in October, it declined in November by 3.7 percent, according to the Federal Reserve. - But even while consumers face high amounts of credit card debt, they will still shop for clothes. In fact, 43 percent of respondents said that they will definitely purchase clothing over the next year. However, that clothing must be discounted, as consumers will continue to pass over luxury brands in favor of those with the best value.
Considering such behavior, apparel buyers and retailers face a tough dilemma. On one hand, stores selling both apparel and accessories experienced a 9.4 percent seasonally adjusted year-over-year decline in December – also a 2.5 percent unadjusted decline from November. But consumers are still buying into lower clothing prices, leading to a 1.6 percent rise in chain store sales from one week ago, according to the International Council of Shopping Centers.
What are your predictions for the upcoming year, of the economy and of your business?