Study: Retail Spending Poised to Improve in Januar
Columbus, OH, January 6, 2006 - Look for overall spending at retail to improve modestly in January, according to Retail Forward’s Future Spending Index.
The index increased to 99.7 from 97.3 in December, suggesting that consumers should continue to open their pocketbooks in the weeks ahead. However, the index is below last January’s level, suggesting that growth will be somewhat weaker than the strong pace logged at the start of last year.
"The positive outlook for the first month of the New Year is the result of resurgent spending plans in the Middle Market income segment, which had been showing some restraint during the holiday months," said Steve Spiwak, an economist with Retail Forward. "Better incomes, investments and home buying among these households, which account for nearly half of total spending, have triggered the expected improvement in spending for January."
Other ShopperScape results indicate that the number of shoppers purchasing holiday gifts online continues to grow. Cyber-shoppers are being lured by free-shipping deals, online research capabilities and low prices.
Wal-Mart still remains the king of low prices. Holiday shoppers said that the retailer is the number-one format in terms of bang for the buck.
The Future Spending Index for Middle Market households jumped higher this month, offsetting declines in the Down and Up Market income segments.
The index for Middle Market households (incomes between $22,500 and $75,000) rose from 93.3 in December to 102.1 this month. Better assessments of jobs and incomes, debt burdens and investment worth compared with a year ago powered the index higher. An uptick in home buying contributed to January's rise in spending intentions for this cohort.
The index for Up Market households (incomes greater than $75,000) slipped to 95.9 in January from 97.3 last month. Greater concern about debt loads has dampened near-term spending plans in this segment, offsetting stronger job security and home buying. A dip in refinancing activity, a key driver of consumer spending in recent years, also is weighing on Up Market spending plans.
Down Market households (incomes less than $22,500) are starting the year with more pessimistic views of job security and credit card balances, causing the index for this segment to decrease to 103.0 in January from 109.5 last month. An improvement in the pace of home buying cushioned the decline.
According to ShopperScape, many shoppers visited cyberspace this year to browse for holiday gifts. But while the percentage of shoppers browsing online for holiday gifts held nearly steady compared to the prior holiday, more of those shoppers actually purchased a gift from an online merchant this year.
Eighty-six percent of all shoppers in December 2004 shopped for gifts online, about the same proportion of shoppers during the 2005 holiday. All three income segments showed essentially the same penetrations of online browsing activity as in 2004.
Up Market shoppers were the most likely to use the Internet for holiday gift shopping (92%) while Down Market shoppers were the least likely (76%).
Although the percentage of shoppers shopping online for holiday gifts has remained consistent, there has been an increase among all markets in the percentage of shoppers purchasing gifts from online retail sites. In December 2005, 79% of all online shoppers reported having purchased a gift online, up from 74% in the prior December.
Down Market shoppers exhibited the greatest increase in the percentage of online shoppers purchasing holiday gifts from an online shopping site, rising from 59% in December 2004 to 65% in December 2005.
Mirroring December 2004 results, Up Market online shoppers were the most likely to purchase gifts from online shopping sites in December 2005.
