Key Takeaways:

Overall Shopping Trends

  • Discretionary spending ability has improved throughout our survey series and recorded the most favorable reading of our series to date this quarter. To frame expectations, though, the percentage who said they have more discretionary spending ability compared to a year ago is now nearly identical to the percentage that says less (but that is an improvement from where we have been in this surveyhistorically).

Seeking Out or Passing By

  • Most of the retailers in our survey are shopped by more of their customers “when passing by” as opposed to being specifically sought out with the intention of shopping there. That’s an issue for retail for obvious reasons (mall traffic worsening). We’d also note that his trend is more pronounced in women. There are some bright spots that are more likely to be “sought out” by customers, like Target, Kohl’s, and JC Penney. Off-price department stores appear to be less exposed to this headwind and both TJ Maxx and Old Navy jump into the category of being more “sought out” than “shopped when passing by” when it comes to millennials and women.

Competitive Dynamics

  • Our net popularity gainer chart (p 24) is one of the most telling in this report. In a nutshell, Amazon is a huge gainer and while there are a handful of bright spots at retail (TJ Maxx, Target) the y/y trend for most of the retailers we track is negative. In short, consumers think most non-Amazon retailers are losing popularity.
  • Amazon continues to make strong gains, but we would also note that we are seeing increases in the percentage of consumers who shop the “non-Amazon” retailers online. This should just serve as a reminder that even when consumers shift from bricks to clicks, all the clicks aren’t going to Amazon. We also think it is worth noting that the off-price department stores don’t appear to have as formidable a share position when it comes to online shopping (their own websites).

Off Price Channel

  • Some investors are concerned that inventory corrections at department stores would lead to product selection issues at off-price. If it is happening, consumers aren’t noticing it yet. In fact, they are still most likely to call off price popularity gainers and are least likely to price check when shopping them (compared to other channels). Prices are still the most important factor when it comes to deciding where to shop, and off-price is obviously well-aligned with this trend.