Amid Uncertainty, Shoppers Express Optimism

This data analysis is presented by John McIndoe, senior vice president of SymphonyIRI Group

Periods of economic transition are often the most difficult for retailers to navigate. As the economy slowly and fleetingly moves out of recession, some shoppers are rapidly returning to their pre-recession shopping habits, others are keeping their wallets and purses tightly shut, and others still are spending more in some categories, but not in others.

This additional layer of attitudes and behaviors complicates an already difficult job for retail marketers, trying to create shopping experiences for an increasingly diverse range of shoppers in terms of income, ethnicity, work situation, trip missions and use of technology.

SymphonyIRI recently released its Q4 2011 MarketPulse quarterly research, which analyzes these shopper attitudes and behaviors regarding the economy and economic effects on their personal financial situation, lifestyle and shopping habits.

Shoppers are somewhat more optimistic about the economy and their personal financial situations today than they were in Q2 or Q3, but in many ways not quite as optimistic as they were at the beginning of 2011. This was the principal finding of the Q4 MarketPulse, but within this core finding are many clues to shoppers’ future plans.


Optimism Grows

In Q4, 27% of shoppers stated they believe their personal financial situations will improve over the next 12 months, a three-percentage-point jump over Q3, but still well below the one-third of shoppers who believed their situations would improve at the end of Q1.

The number of pessimists — those believing their personal financial situations will be worse off over the next 12 months — declined in Q4 over Q3, but remained well above Q1 responses.

Similarly, 20% of shoppers in Q4 expect the economy at large to improve in the next six months, well above the 16% with this opinion at the end of Q3, but a significantly fewer number than the 28% with optimism about the economy at the end of Q1.

On a wide range of life conditions, shopper opinions diverge. With regard to job stability, while 16% expect improvement in the coming year, there is a persistent pessimism in place. Shoppers expecting diminished job security rose to 18% vs. 16% in the Q1 survey.

Generally, shoppers continue to also have a pessimistic view of the overall cost of living, but in a few areas they show a level of optimism. In Q4, 21% stated they will be able to put more into personal savings over the next year, versus 18% in Q3. In addition, 21% believe the value of their investments will rise in Q4 as compared to 18% in Q3.

On the more positive side, just 18% of surveyed shoppers expect gasoline prices to increase significantly, versus 43% in Q1, and 14% anticipate the cost of utilities rising a large amount as compared to 19% in Q1.


Conservative Strategies

Manufacturers and retailers both trained shoppers to seek out deals during the last recession, and these consumers are continuing to seek out sales and promotions with a vengeance. One-third of surveyed shoppers purchased an astounding 50% or more of their baskets on deal in Q4 2011.

Surprisingly, this is true across all income segments, even those earnings more than $100,000 annually. Among these wealthier shoppers, 35% purchased at least 50% of their baskets on deal. And, looking for deals shows no signs of abating, with 26% of shoppers reporting they are buying more on deal today than one year ago.

A wide range of both traditional and new media influences are impacting shopper product decisions. Shoppers named in-store circulars as an important influencer, 44% of respondents listed these in Q4, an eight-point increase over Q1. Coupons also increased in importance, influencing 55% of shoppers in Q4, a jump from 48% in Q1.

As retailers adjust their strategies to attract and retain shoppers in 2012, they face the dilemma of a shopper base still mired in recessionary shopping practices characterized by looking for deals, focusing on low price and reduced channel loyalty. However, overlaid with this ongoing pessimism are rays of shopper optimism. To avoid leaving money on the table, retailers need to identify and cater to these optimistic shoppers while concurrently continuing to focus on the cautious shopper.

To develop successful strategies to motivate and expand the shopper base, marketers must gain a highly-detailed understanding of the shopper, his and her motivations, attitudes and personal situations.  Then, they must collaborate with manufacturers to develop highly-tailored product development, packaging, pricing, merchandising and promotion, layout and assortment strategies designed to attract specific shopper segments. And, they must repeat this process continuously as additional groups of shoppers start to display more optimistic behaviors.