Knowing When to Hold 'Em
May 24, 2010,
As financial anxiety sent consumers at all income levels scurrying down-market last year, retailers that found themselves servicing a relatively more monied clientele than their core customer vowed to keep those shoppers in the fold once things eased up.
Think about where we were a year ago. Target had the lock on “expect more” and spent much of the year furiously elevating its low price message in a kind of “Hey, guys — we're a discounter, too!” move. Meanwhile, Walmart reported its better-heeled customers were finally fanning out beyond the food aisles to shop the general merchandise areas of the store.
This is where we are now. Walmart says its customers are still hurting. Target says its customers did not directly bear the brunt of the economic crisis, and now that they've paid down their credit cards they are starting to do some discretionary spending.
TJX and Ross Stores — both of which benefitted from the consumer pivot to bargain venues — are still going great guns and claim upmarket customers are still hitting their stores.
But it appears consumers are already dreaming of somewhat less constrained budgets. In a BigResearch survey released earlier this month, 29.6% of 5,000 people surveyed said “luxury” means being about to buy at a high-end store rather than a department store. Another 17.9% would think it luxurious to shop a department store rather than a discounter, and 16.3% would like to indulge in something at discount other than necessities.
A linens-specific survey from the same firm earlier this spring found that while Walmart continues to dominate as a destination for the category, the discounter is seeing customers move elsewhere for bed, bath and window goods. (So, by the way, were Bed Bath & Beyond, JCPenney and Kmart.) Who was picking up share? Target.
The study found price is still paramount. And 36.2% of consumers in the most recent study define “luxury” as the ability to pay their bills on time.
So it's probably too early to say the great migration back to relatively pricier retail outlets has begun, but things are beginning to stir out there.