Retail Merchants AssociationEconomic Forecast Breakfast

October 1, 2010

Five Things You Need To Know

Scott Krugman, National Retail Federation

My PowerPoint skills are lacking.

About National Retail Federation• NRF is the world’s largest retail trade association• We are a global organization that includes

retailers of all sizes, formats and channels• We represent an industry with more than 1.6

million American companies that employ nearly 25 million workers and generated 2009 sales of $2.3 trillion

• Two of our main objectives is to educate and advocate

Source: NRF

© 2010, BIGresearch®

Consumer Intentions & Actions: September

1. More are Spending More, Fewer are Spending Less on Gifts2. Confidence in the Economy is Wilting3. Unemployment Continues to Concern4. Practicality Remains, but Paying with Plastic is OK5. Temptation to Spend Exists, particularly with Electronics

Disclaimer: BIGresearch® makes no warranties, either expressed or implied, concerning: data gathered or obtained by BIGresearch from any source; the present or future methodology employed in producing BIGresearch statistics; or the BIGresearch data and estimates represent only the opinion of BIGresearch and reliance thereon and use thereof shall be at the user’s own risk.

BIGresearch® is a registered trademark of Prosper Business Development Corp.

This report is derived from the following BIGresearch® Studies:

• BIGresearch® Consumer Intentions & Actions® Survey (CIA™), September 2010 (N = 9291, respondents surveyed 8/31 – 9/8/10)

• BIGresearch® Consumer Intentions & Actions® Survey Trends, September 2002 – September 2010

Five Facts You Need to Know About Consumers Headed into Holiday ‘10

© 2010, BIGresearch®

#1: More are Spending More, Fewer are Spending Less on Gifts

Based on your present situation and feelings toward the economy, which of the following best describes your plans for the December Holiday Season?Adults 18+

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

© 2010, BIGresearch®

#1: More are Spending More, Fewer are Spending Less on Gifts

Based on your present situation and feelings toward the economy, which of the following best describes your plans for the December Holiday Season?

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 10

I plan to spend MORE. I plan to spend LESS.

© 2010, BIGresearch®

#1: More are Spending More, Fewer are Spending Less on Gifts

• Retailers should experience jollier holiday season than 2008 and 2009

• Consumer spending during fall 2010 increased slightly, showing signs for a positive gift giving season

• Influential factors• Decorated stores & holiday spirit• Customer service• Discounts & sales • Heavy advertisements • Easy to navigate store layout

© 2010, BIGresearch®

#2: Confidence in the Economy is Wilting

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 09-10

Confident/Very Confident in Chances for a Strong EconomyAdults 18+

© 2010, BIGresearch®Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 02-10

Confident/Very Confident in Chances for a Strong EconomyAdults 18+

#2: Confidence in the Economy is Wilting

© 2010, BIGresearch®

#2: Confidence in the Economy is Wilting

• Consumer confidence is definitely lacking throughout the US• Only 27.4% are very confident/confident in a strong

economy• To drive consumers into your store and/or purchase your

product, your company will need:• A product and/or service that is needed and wanted by

the consumer • Demonstrate the benefit to the consumer

• Positive statements regarding the company • Excellent customer service to differentiate your

company

© 2010, BIGresearch®

#3: Unemployment Continues to Concern

Regarding the U.S. employment environment, over the next 6 months, do you think that there will be more, the same or fewer layoffs than at present?Adults 18+

4.0%Concerned with

becoming laid off

12.9%Know someone who

has been laid off

9.6%U.S. Unemployment

Rate

Source: U.S. Bureau of Labor Statistics

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

© 2010, BIGresearch®

#3: Unemployment Continues to Concern

• Despite high unemployment, concern of potential job loss has eased slightly

• Spending patterns are expected to increase • Spending based on a sense of gratitude • “I made it through the past several difficult years”

© 2010, BIGresearch®

#4: Practicality Remains, but Paying with Plastic is OK

In the last 6 months, have you made any of the following changes?Adults 18+

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 06-10

Paying with Cash More Often

Sept-10: 20.3%

Sept-09: 22.6%

Sept-08: 21.8%

Sept-07: 18.8%

Sept-06: 22.1%

© 2010, BIGresearch®

#4: Practicality Remains, but Paying with Plastic is OK

• Practical spending patterns by consumers can be based on:• Back to school purchases• Saving for holiday purchases• Little confidence in the economy

• A greater portion of holiday gift giving anticipated to be practical items

• As the holidays approach, expect credit card activity to increase

© 2010, BIGresearch®

Category: Aug-10 Sept-09 Sept-08 Sept-07 Category: Aug-10 Sept-09 Sept-08 Sept-07

Children’s down up flat down Toys/Games up up up down

Women’s Dress down up flat down CDs/DVDs/Videos/Books up up up down

Women’s Casual flat up up down Electronics up up up down

Men’s Dress flat up up down Groceries down up up down

Men’s Casual flat up up down Home Improvement down up up down

Shoes down up up down Lawn & Garden down up up down

HBC down up up down Home Furniture down up up down

Dining Out down up up down Home Décor down up up down

Sporting Goods down up up down Linens/Bedding/Draperies up up up down

#5: Temptation to Spend Exists, particularly with Electronics

Retail Merchandise Categories - 90 Day Outlook(Sept-10 compared to Aug-10, Sept-09, Sept-08, and Sept-07)

Note: “Up,” Down,” “Flat” refers to the direction of the Diffusion Index compared to the previous month (Aug-10) or years (Sept-09, Sept-08, Sept-07). Diffusion Index = % Spending More - % Spending Less.

Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

Over the next 90 days (September, October, and November), do you plan on spending more, the same or less on the following items than you would normally spend at this time of the year? Adults 18+

© 2010, BIGresearch®Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

Do you plan to make any of the following major purchases within the next 6 months?Adults 18+

#5: Temptation to Spend Exists, particularly with Electronics

© 2010, BIGresearch®

#5: Temptation to Spend Exists, particularly with Electronics

• Home for the holidays theme will resonate with consumers • Celebrations for a brighter year bring high hopes tempered

with practical expectations.

• Top gift items include:• Electronics • Toys• Books • Clothes

How to stay informed

www.smartbrief.com/nrf