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Who are the shoppers and will they spend?
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In these difficult economic times, with the stock market up one day, down the next, merchants are looking everywhere for any little clue on what to expect in the near future and how to maximize sales. The results of a recent Gallup poll may be helpful. Gallup recently released results of their study of consumers' spending habits in stores, restaurants, gas stations, and online, from the beginning of 2009 through October 21, 2009. Several interesting results revealed insights which are useful to retailers planning sales and promotions.
The first trend notes consumer spending is highest on Fridays and Saturdays, lowest on Mondays and Tuesdays. In fact, the average daily spending on weekdays is $58, compared to average weekend spending of $69, a difference of just under 20%. Gallup concludes these results indicate consumers have little time for shopping or entertainment during the week.
Gallup also describes what they call the "paycheck effect," where spending increases at the beginning and middle of each month. Several conclusions can be drawn from these observations. First, many people are living paycheck to paycheck, particularly in the current economic climate. Also, consumers appear to be making fewer shopping trips per month, although they spend slightly more when they do shop. They are purchasing more necessities and fewer impulse items, on these shopping trips, as well.
Gallup points out the likelihood that shoppers feel more confident spending when they have more cash on hand, on or near paydays, and they are less confident about using credit cards. The reduction of credit-card use may be due to caution as consumers try to save money, or perhaps it may indicate a lack of credit availability. Credit-card issuers have been instituting broad reductions in credit limits for their customers - in many cases sharply reducing the consumer's purchasing power. In either case, there may be a new "cash-based" spending pattern emerging.
Gallup notes that income is the highest predictor of spending. And the generally agreed fact that men have higher average incomes than women may account for the noted trend that men are spending more on average than women. Americans between the ages of 30 to 49 with growing families tend to spend the most, and Americans age 65 or older spend the least.
Gallup finds that the monthly average of consumer spending has not changed since January 2009. But data also indicates consumer spending is roughly 30% below the same week a year ago. Therefore, it may be safe to conclude the majority of consumers reduced their spending significantly in 2008 and have yet to begin increasing the dollars spent on purchases. But again the cycle of purchases shows a significant trend toward payday spending. Since August of this year, this trend toward higher payday spending has increased by $10 or more, with declines in non-payday weeks. In general, merchants can look to a more cash-based spending pattern. The upside: Fewer merchant fees to pay on credit-card purchases in a holiday season which may not show much improvement from last year.
Even though these results may seem obvious, rather than earth-shattering, they can confirm suspicions we may have had. And the social science behind it can help nonetheless to make concrete plans. Merchants can use these survey results to think creatively: More staff for weekends? Time sales and promotions for weekend? Market products as necessities vs. indulgences? Identify customers' spending habits, age group, and gender pertinent to product selection and inventory levels? You get the idea. If you have other thoughts pertaining to the results of this Gallup report, email them to me and they may be added to this article as a footnote!
For more info: Economix article, Cultmarketing.com article, Ezinearticles.com
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