September 10, 2009, 12:00 AM

E-commerce is in tune with shoppers’ mindsets, Retail Forward says

Heading into the economic recovery, many shoppers will continue to use the money-saving tactics they’ve employed during the recession, including searching, comparing prices and finding coupons online, says an executive of consulting firm Retail Forward.

 

Heading into the economic recovery, many shoppers will continue to use the money-saving tactics they’ve employed during the recession, including searching, comparing prices and finding coupons online, Lois Huff, senior vice president of consulting firm Retail Forward, said at a company-sponsored conference today in Chicago.

Shoppers have become more purposeful during the recession, focusing on needs not wants and seeking the best deals, and surveys suggest many consumers will stick to that approach as the economy improves, Huff said at the 2009 Retail Forward Strategic Outlook event. For instance, 27% expect to continue to use coupons more than in the past and 24% to use comparison shopping tools to get better prices, Huff said, citing a monthly Retail Forward survey of consumers.

“The deal-seeking shopper has learned that if I invest the time I can get a huge return on that time,” Huff said. Much of that time is spent using such online resources as list-making tools, coupon web sites, opting in for retailer e-mails and visiting comparison shopping sites. Mobile applications that allow customers to compare prices while in stores will also be used increasingly by value-conscious shoppers, she added.

Because e-commerce is faring better than store-based retailing, and is posed to grow more rapidly in the coming years, there will be more investment in the online channel, Huff said. “Whether that’s retailers investing or capital markets allowing upstarts or established entities building their offers, that will strengthen this channel in the recovery and beyond,” she said.

Looking at the economy as a whole, Huff predicted the recovery would first boost sales of necessities such as food and drugstore items, with consumers beginning to spend more on apparel and footwear as the job picture improves and they become more confident. Spending on discretionary, big-ticket items may not pick up for a year or more, she said.

Retailers that cater to middle-aged shoppers will also see slower growth because the so-called Baby Boomer generation is spending less as it seeks to rebuild the wealth it lost as a result of declines in stock prices and home values, Huff said. That’s a big part of retail spending as the 81 million Baby Boomers aged 46-64 account for 42% of consumer spending, although only 37% of households.

They are more cautious today than younger consumers, according to Retail Forward’s monthly ShopperScape data: 48% of consumers in the Boomer category plan to change their shopping habits in the future as a result of the recession, compared to 45% of Generation X consumers aged 26-45. She says Gen X consumers, many of them in the home-buying period of their lives and 71% with children, will play a bigger role in the recovery than they have in retail shopping in the recent past.

Earlier in the day, Retail Forward senior economist Frank Badillo projected that the most likely scenario for the economy indicates that retail sales will turn positive in the fourth quarter this year, and strengthen throughout 2010. Excluding sales of cars and gasoline, he said retail sales likely will increase about 1% in the fourth quarter of this year, 3% in 2010 and 4.5% in 2011 and beyond.

However, fourth quarter retail sales excluding the food and drug categories-in effect, holiday sales-will be flat in the fourth quarter. “That’s an improvement over the 4.5% decline in holiday sales last year, but still the second-worst holiday in the last 40-plus years,” Badillo said.

Nonetheless, he said, retailers should plan for a recovery coming soon. “The first signs should emerge very soon and build in the next year,” Badillo said. “During this time rising expectations will lift many shoppers back to their old shopping habits.”

He said e-commerce and mass merchandise retailers, including Wal-Mart, will grow faster than the retail sector as a whole, while home furnishing retailers and department stores will grow more slowly.

 

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