Consumer Price Sensitivity Should Benefit Wal-Mart
U.S. consumers are becoming increasingly price-sensitive and more likely to base purchase decisions on price, according to a study from The Gordman Group. “Retail Trend Tracker Survey” results indicate that discount retailer Wal-Mart stands to gain particular benefit from consumer desires for lower-priced merchandise.
Selected highlights from the survey’s findings follow.
It’s the Economy, Stupid
A full 90% of respondents say the economy has affected how much they spend, and 80% say the economy has affected where they shop. In the last three months, 45% of respondents have spent less, and 31% expect to spend less in the next three months. More than half, 59%, believe the economy is getting worse, and almost half, 49%, say the economy has affected them directly.
Cost over Comfort
When asked to select from a range of factors that most affect their purchase of apparel or home items, 21% of respondents selected price. The next most popular responses, the item is on sale and having the style I want, were selected by 14% of respondents each. This means that for more than one-third of respondents, a monetary factor is the most important aspect in their purchase decision. The least-popular factor, having self-checkout, was only selected by 1% of respondents. Other customer comfort factors, such as convenience of the store, customer service, and return policy, were selected by a combined 22% of respondents.
Wal-Mart Wins Again
More than half of respondents, 54% plan to spend a larger share of their budget at Wal-Mart in 2009 than they did in 2008. The next-most popular response to this question, internet stores, was only selected by 27% of respondents as a destination where they will spend more money this year. For chief Wal-Mart rival Target, 25% of respondents said they will spend more money in 2009.
Wal-Mart recently reported record net sales of more than $400 billion, a 7.2% increase from about $374 billion, and a comparable store sales increase of 3.5% during fiscal 2009. The discounter plans to open as many as 165 new discount stores and supercenters in the U.S. this year. Target reported total sales of $62.9 billion in its fiscal year 2008, which roughly corresponds with Wal-Mart’s fiscal year 2009. This was a 2.3% increase from $61.5 billion. Comparable store sales declined 2.9% for the fiscal year.
The Retail Trend Tracker Survey was conducted via Internet April 2-5, 2009, with members of households who spent the most for apparel and home furnishings items. Of 526 participants, 367 were female and 158 were male.