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Retail Trends

Rethinking Priorities

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M ove the belt over another notch; the budget tightening that consumers have endured for four years isn’t showing signs of stopping. Despite positive holiday sales figures, it appears that many of the changes that consumers have made in spending habits are becoming hardened, according to an exclusive consumer survey conducted for STORES by BIGinsight.

“Events that have transpired over the past four years have forever changed consumers, and this is evidenced in what they deem expendable and untouchable purchases,” says Phil Rist, executive vice president, BIGinsight. “The financial meltdown, natural disasters and the threat of terrorism have sent shock waves through consumers and impacted their priorities. The added layer of advancing technology has changed how they research and make purchases… the retail landscape will likely never be the same.”

In all, some 6,000 shoppers were asked which items are untouchable in their budgets — meaning they could not live without them — and which are expendable.

Luxury purses — listed as the most expendable item each year since STORES began asking these questions in 2008 — continue to top the list. Likewise, Internet service remains the most untouchable item, a position it’s also held since 2008.

That doesn’t mean there isn’t some shifting going on. Consumers may be taking better care of their bodies — with organic food and gym memberships increasingly becoming more untouchable — but appearance doesn’t appear to be as important. High-end cosmetics, facials and manicures all were seen as more expendable than in previous years.

But those items were hardly alone. Of the 36 items surveyed, 22 were ranked as expendable by at least 75 percent of consumers; another five items were considered expendable by more than 70 percent. Only four categories — Internet service, mobile phones, basic cable/satellite and discount shopping for apparel — were considered untouchable by more than half.

In general, those who own tablets (like a iPad) tend to view most items as a little more untouchable than the average consumer – but they deem basic cable/satellite TV and Internet services more expendable than average, proving that tablets can serve as a substitute. Smartphone users also were slightly more likely than average to view items as untouchable, though not by as wide a margin as tablet owners.

Even as consumers trimmed their spending, they’ve increased their charitable giving. Some 41 percent said charitable contributions were untouchable, a category that has shown continued increases since 2008, when 32 percent deemed giving to others untouchable.

Dining shifts in importance

E ating out still remains largely expendable, though more so for women than men. Fine dining was considered an unnecessary expense by 89 percent, closely followed by fast-casual (restaurants like Panera Bread) at 76 percent, casual sit-down dining (69 percent) and fast food (65 percent). Of these, fine dining has held somewhat steady, inching upward to 90 percent in 2009 and 2010 and returning to 2008 levels in the most recent survey; the other three have become slightly more expendable.

As consumers focus more on eating at home, the quality of the food has become more important. Organic foods have consistently (if unspectacularly) become more untouchable, rising from 15 percent in 2008 to 19 percent in 2011. Still, the news is not all good for organics: Of those who have cut back on spending, 37 percent say they’ve done so in organic food purchases, placing this category mid-pack among those earmarked for budgetary trims.

Apparel shopping discounts remain steady
W ith economic growth lagging — even though the recession was declared officially over more than two years ago — it’s obvious that not all purchases can be put off forever; clothing doesn’t fit any more, shoes wear out and “mom jeans” draw derision. As the economic conditions have continued, consumers have become much more likely to make discount and department store shopping for apparel untouchable. Specialty shopping — 9 percent in 2008, 10 percent in 2011 — has remained fairly steady.

In 2008, 43 percent viewed discount apparel shopping as untouchable, compared with 53 percent in 2011. Department store apparel shopping has shown similar gains, increasing from 19 percent untouchable to 26 percent over the four-year period.

A new pair of jeans and new shoes have become even more expendable over the past four years. In both cases, women find these items to be more expendable than men. Some 25 percent of men say a new pair of jeans is untouchable, compared with 19 percent of women. For new shoes, it’s 31 percent of men who find the purchase untouchable, compared with 26 percent of women. Both categories become more expendable as age increases; 26 percent of those 18 to 34 say a new pair of jeans is untouchable, compared with 16 percent of those over 55.

If nothing else, the recession has forced many consumers to stop living the high life. Country club memberships, designer purses, high-end cosmetics, high-end jewelry, maid service and facials top the list of most expendable items — and each has consistently become more expendable. These items are only slightly more expendable for those making less than $50,000 than for those who make more.

Work hard, play harder
O ne broad area where consumers are not changing their viewpoints is in leisure activities. Extra-curricular sporting leagues, movie theater tickets and fitness/gym memberships have increasingly become untouchable.

Extra-curricular leagues showed the biggest jumps between 2008 (14 percent) and 2009 (16 percent); the 2011 figures are unchanged from 2010.
Fitness and gym memberships showed another uptick between 2010 (16 percent) and 2011 (18 percent) and have continued to gain each year since 2008, when only 14 percent viewed them as untouchable.

Movie theater tickets had become increasingly untouchable between 2008 and 2010 before dipping slightly (to 19 percent) last year. Conversely, of those who have cut back or plan to, movie tickets were the second-highest area of cuts, with 58 percent saying they no longer spend what they once did on catching the latest Hollywood offering. That’s an attitude that’s felt at the ticket window: Box-office tracker announced that ticket sales hit a 16-year low in 2011.

Movie theater ticket sales have long been threatened by in-home theaters, especially as streaming services like Netflix have become more commonplace. While consumers’ views of streaming movie services as untouchable has increased slightly, this appears to be an area where consumers plan to trim. Some 40 percent planned to cut back, up from 32 percent in 2010, the first year the survey asked about streaming movies.
Vacations have become slightly less vital: 70 percent viewed them as expendable in 2008, compared with 71 percent in 2011. However, like movies, those who have cut back have taken a knife to their annual getaways, with 57 percent saying they have or plan to cut back here.

While basic cable/satellite remains one of the top untouchables, those who view it as such declined one point to 60 percent in 2011. Premium cable/satellite weakened slightly, with 26 percent viewing it as untouchable.

The woes of the magazine world are reflected in the survey as well. Magazine subscriptions have become more expendable (87 percent) in 2011, up from 85 percent the year before.

Technology remains strong
T echnology has solidified its place in the consumer’s budget, with Internet service seen as expendable by only 18 percent. That figure has remained at or below 21 percent for each of the four years of the survey. And it doesn’t appear likely to change: Only 11 percent of those who have or plan to cut back say they’ll do so in the area of Internet service.

Mobile phones also have become viewed as a necessity, with only 33 percent labeling them as expendable. This figure remains virtually steady among all age groups. But younger consumers tend to see more expanded mobile phone capabilities, like web access and texting, as being untouchable. Half of those in the 18-to-34 bracket see these enhanced services as expendable, compared with 84 percent of those over 55. In all, 67 percent deemed this as expendable, down from 77 percent four years earlier.

Consumers are a little more likely to see upgraded mobile devices like smartphones, iPads, tablets or e-readers as untouchable across all age brackets. Younger users (39 percent) are the most likely to deem these a necessity, compared with those 35 to 54 (26 percent) and those over 55 (13 percent).

Still, this is becoming an increasingly important category to consumers. In 2008, 12 percent viewed these upgraded devices as untouchable — half of what it averaged in 2011.

Only 15 percent say they have or will cut back on basic mobile phones (16 percent), about half the number who say they have or plan to cut back on enhanced phone services like texting (31 percent) or mobile devices like iPads (34 percent).