Although retailers have been thinking about the 2009 holiday season since last January, consumers are just starting to think about their holiday plans. As we do every year, Nielsen fielded its annual holiday retail survey at the beginning of this month to get an understanding of consumers’ holiday shopping plans.  While the economy appears to be improving at a snail’s pace, it’s apparent that many consumers intend to spend less and save more this holiday season. In fact, some 42 percent of respondents stated that compared to a year ago they were planning on spending less money on holiday gifts, compared with only 4 percent who intend to spend more.

An even more surprising trend is that of the money that consumers plan to spend this holiday season, a smaller percentage will be spent online: 63 percent of survey respondents said that they would do at least some holiday shopping online, down 10 points from two years ago. Meanwhile, 7 percent of respondents said they would not do any shopping online compared to just 1 percent in 2007.

Consumers Expect to Spend Less Money Online this Year

Among those that do plan to shop online this holiday season, many consumers expect to spend significantly less than last year. In 2008, 42 percent answered that they would spend more than $300 online during the holiday season. This year, that percentage has dropped to just 31 percent, while 22 percent of respondents said that they are going to spend less than $100 online.

So why do some consumers shop online? Interestingly, the main reason is not to save money, but for convenience. Respondents said the top reason they would shop online was the ability to shop whenever they wanted, followed closely by the ability to avoid the large crowds associated with holiday shopping.

While consumers appear to no longer view the Internet as a value channel, they still see it as a place to do comparison shopping, find coupons and do research. And it’s not just consumers coming from lower household incomes–shoppers of all ages and income levels rely on the Internet to inform their in-store purchases. In October 2009, over one-third of the U.S. online population visited at least one deal-oriented Web site.

Although many consumers don’t feel that they save money by making purchases online, they do view the Internet as a deal-seeking venue. When asked how they use the Internet before going shopping in physical stores, 55 percent of respondents said they use the Internet to compare prices across retailers and 49 percent answered that they use the Web to learn about sales and promotions available in physical stores.

It is clear that while the majority of all purchases continue to take place offline, the Internet has an important role to play—deals found online impact holiday purchase decisions and drive purchases at brick and mortar locations.

For more information and insights on the 2009 holiday season, download our recent webinar,2009 Holiday Retail Season: What Consumers Have in Store for Retailers this Season.

Overall, Canadians were more confident than their neighbors to the south, with more positive outlooks regarding job prospects, the state of their personal finances and their willingness to spend.  With respect to jobs, 46 percent of Canadians say that local prospects will be “good” or “excellent” over the next 12 months, compared to just 28 percent in the U.S.  More than half (55%) feel that the state of their personal finances will be “good” or “excellent,” up three points since July and compared to 51 percent of Americans who said the same.  More than two-fifths of Canadians feel it is a good time to buy the things they want and need, compared to 33 percent of Americans. All of that said, a strong majority (82%) of Canadians feel that the country is still in a recession, despite the fact that the Bank of Canada announced that the recession was over.  Nine in ten Americans said that they felt their country was still in a recession.

In a sign that the consumer’s obsession with all things economic and recession is starting to recede, Canadians are once again showing concern with other issues such as work-life balance and health.  But despite these positive signs, Canadians remain cautious about spending.  Paying off debt is the top use for spare cash (with 39% saying that is their priority) followed by socking away money into savings (26%).  When they are spending, holidays and vacations is the top category (26%) with out-of-home entertainment (23%) and home improvements (20%) rounding out the top three.  Canadian men indicated that they are more likely to spend on outside entertainment and new technology, while responsible Canadian women are focused on paying off debt.

Read the full report.

Sentiment = Sales
“A nine-point surge in consumer confidence signifies a welcome return to positive territory. It really demonstrates that in the last six months, a majority of consumer sentiment across the globe has shifted gears from recession to recovery — the tide has turned,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “In this economic climate, sentiment is closely correlated to actual sales. For example, in Australia, consumer confidence was up 11 points in the third quarter, and strong economic conditions prompted the Reserve Bank of Australia to raise rates, becoming the first G20 country to do so. Correspondingly, we have seen sales increase 2 percent in each of the last two months in defined fast moving consumer goods (FMCG) categories while online sentiment (buzz) regarding the recession is at the lowest levels since we began tracking that dynamic in January 2009.”

• Read additional insights on global spending trends in the Nielsen Economic Current

Majority of countries show gains
Consumer confidence rose in 45 out of the 52 countries compared to six months ago (Ukraine and Saudi Arabia were added in the latest round of the survey).  In April, the Index hit its lowest point of 77 index points, but as massive stimulus plans began to take effect around the world during the second quarter, consumer confidence slowly began to recover.

Key Highlights

• Consumers in India, Indonesia and Norway topped the confidence index, while the most pessimistic consumers were in Latvia and Japan.
• Hong Kong posted the largest consumer confidence increase in the third quarter compared to Q2, up 14 points from 79 to 93 index points, followed by South Korea (+13 points) and Brazil (+12 points).
• Among other BRIC nations, consumer confidence rose 8 points in India, 6 points in China and 4 points in Russia compared to the previous quarter.
• Consumer confidence fell in only two countries in the third quarter: Spain (-4) and Japan (-2).
• Australia and New Zealand also posted double-digit increases during the last quarter, while Europe’s two largest economies, France and Germany, posted the highest increases in the Eurozone, up 7 and 5 points, respectively.

Nielsen’s global consumer confidence in October rebounded to almost the same level as the first half of 2008 before the very worst of the financial crisis hit global markets. “The survey shows how much the pace of economic recovery has accelerated in the last six months, especially in Brazil and some Asian markets,” said Russo.  “Nielsen consumer, retail and media data also shows a trend of consumers shifting gears from recessionary into recovery mode.”

The Nielsen Global Consumer Confidence Index tracks consumer confidence, major concerns and spending habits among more than 30,500 Internet users in 54 countries. The latest round of the survey was conducted between 28 September and 16 October 2009.

“It was resoundingly clear from the presentations that we have a new consumer on our hands, one that has emerged from the financial crisis with what could be a permanent shift in their values, spending habits and lifestyle choices and affecting the way they consumer and purchase alcohol.  They are more frugal and demanding value.  Investing in new product development should be an essential part of any suppliers’ strategy in counteracting consumers’ heavy reliance on price discounts as a key purchase driver,” said Michael Walton, Executive Director, Nielsen Liquor Group in the Pacific.

Nielsen’s regional experts also provided a snapshot of trends in their respective markets.  The four key topics that were common across regions were:

• Low carb and low sugar: new products and brand extensions in this category are performing relatively well.
• Marketing to the over 50s demographic: This group makes up between 40-50 percent of alcohol consumers in the UK, US, Australia and New Zealand, yet are often overlooked when it comes to marketing in favor of a millennial focus.
• Online consumers: New ways and approaches to marketing to the technologically savvy consumer.
• New product development: A critical pathway to improve returns and drive real category growth.

Gavin Humphreys noted that just 57 percent of British beer drinkers popped over to the pub in 2009, compared to 70.5 percent in 1998.  In fact, the off-trade sector looks set to overtake share of beer consumption over the next two years.  While beer remains the favorite, wine is rapidly gaining share, driven by its link with in-home entertaining and also the availability of cheaper South African, Italian and Chilean varietals.

In the U.S., Danny Brager noted that more than 50 percent of Americans choose to entertain and eat at home more often.  Consumers are often trading down in an effort to find the best value, favoring domestic offerings and sticking with brands they know and trust.

Paul Kirby said that almost half of Australian drinkers claimed to be going out less often compared to last year, but are actually trading up when they do go out, sparking growth in premium and super premium alcohol segments (imported beer, international wine and bottled wine priced over $20).  Almost half of all packaged liquor was sold on promotion and 77 percent of alcohol consumers selecting their choice of outlet because it offered great promotions.

Just to the southeast, 60 percent of New Zealanders claimed to be going out less often compared to last year, according to David Hanson.  Annual sales for the off-premise market grew by 10 percent in value terms and 7 percent in volume.  More than three-quarters (77%) of all beer sales were sold on promotion.

Overall, the study shows that many consumers have adopted more environmentally friendly habits, while others have not acted as quickly. “The current momentum surrounding green initiatives and reduced energy consumption presents utilities and home improvement companies with a golden opportunity,” says Jonathan Drost, Account Executive, Energy for The Nielsen Company. “When going green is cost effective, such as opting for Energy Star appliances or government incentive programs, customers migrate in that direction. The biggest hurdle for energy companies is educating the consumer on things like Smart Grids, Energy Efficiency programs and Renewable Green Energy.”

Red State, Blue State, Green State, Clean State
While clean energy and conservation seem like topics on which everyone can agree, consumers participating in green energy programs, like Energy Star tax credits or green pricing programs offered by utility companies, show party line splits. With roughly 3 percent of households participating in these programs, homes identifying as “liberal” or “moderate” are more likely to take part than conservatives.

The level of participation varies widely by region. The west (consisting of California, Oregon and Washington) has embraced green energy programs far more than any other region, comprising 24 percent of all participation. This is due largely to the fact that California has had green pricing programs in place for many years.

Demographically the responses indicate that green energy program participation was greatest among the higher educated and those making over $50,000. But, surprisingly, a higher proportion of those making between $50,000-$100,000 (34 percent) participated compared to those making more than $100,000 (30 percent). Participants also skewed younger, with 40 percent falling between the ages of 18-34 and 39 percent in the 35-54 year age range. Those above 55 make up 20 percent of those taking part in green programs.

Here Comes The Sun
Renewable energy sources are at the heart of the emerging green economy, and if consumers have any say, solar would be their carbon neutral source of choice.  “I believe solar came out on top as a preference because it is a technology that consumers can identify with,” Drost offers.  “Not only can a consumer place solar panels on their home or purchase solar water heaters, but also they see retailers installing solar panels on their roof and hybrid cars with solar roof options. It’s been a media hot topic as well.”

The Drive for Plug-ins
Plug-in hybrids may help push consumers away from their oil-centricity. While only 3 percent of households say they plan on buying a plug-in hybrid, an additional 24 percent said they would purchase once the technology becomes more widely used.

Fifty-eight percent of respondents said they would wait until their current vehicle needs to be replaced before running out to purchase a plug-in. Still, there is a core group that remains pro-gas-guzzler. Fifteen percent of those polled said that they would keep buying gas cars until they are no longer available.

“This is an exciting and challenging time in the industry,” says Drost. “We are past the ‘early adopter’ stage in many areas of Energy Efficiency and Renewable Energy. It will require an increase in education, consumer targeting, and messaging to bring the next wave in. When you consider 95% of Households say they are willing to change the way they consume energy, the next wave could be very, very large.”

• Download The Nielsen Company’s Energy Trends report.

With hopes for a full economic recovery accelerating in 26 out of the 28 major global markets surveyed as part of the Nielsen Global Consumer Confidence Index in late June, consumers around the world might be expected to return to their previous spending patterns.  But according to a new report from Nielsen, some consumers may find it hard to shake recessionary habits.  The severity of the recession has brought about a change in consumer values, spending habits and lifestyle choices in some parts of the world, and the indication is some consumers in the West will continue to refrain from excessive or unnecessary spending across all aspects, at least in the short term.

Highlights from the report include:

• Nearly one-third (29%) of consumers will continue to economize on gas and electricity, with 48 percent of Americans saying that they will continue to save on utility bills.
• One in six global consumers will continue to cut back on take-away meals, with 22 percent of Australians indicating that’s one area they will continue to reduce spending. Significant numbers of New Zealanders, Japanese, Irish, South Africans, Brazilians and Americans also indicated they would stay away from take-away.
• One in six global consumers say that they will continue purchasing cheaper grocery products, spend less on new clothes and cut down on out-of-home entertainment.

The findings were not all cautious, however.  Consumers in the BRIC markets (Brazil, Russia, India and China) are generally looking forward to putting recent recessionary behaviors behind them and returning to their previous spending patterns.  Buoyed by rising stock markets and continued (if slower) economic growth, these consumers offer marketers, retailers and others some hope in the short term.

Findings included:

• Chinese remain the most confident of an economic rebound in the near future, and sales of consumer goods products remained robust last year – up 21 percent.
• One in six Russians said that they would not retain any of their recessionary habits once the economy improves, and are particularly eager to spend their money on clothing.
• Technology such as home computers and mobile phones look to be early winners: consumers in Japan, Korea and the Philippines are looking forward to upgrading their current gear.
• More than 40 percent of Americans say they expect to increase their spending on travel and holidays, dining out and out-of-home entertainment in the coming months.

As economic recovery gather pace, consumption and spending will increase, but the post-recession consumer is likely to consume very differently.  She will think twice – and maybe thrice – about making purchases big or small.  It’s now fashionable in the West to be frugal and trendy to be thrifty.  But marketers that are able to convey the value of their products and services will likely continue to grow and prosper.

Download the full report: Consumers in a Post-Recession World

SUMMARY: When the recession ramped up, retailers responded, passing along gasoline and commodity savings to shoppers, cutting prices to sharpen their competitive edge and leveraging EDLP strategies. Consumers also responded by clipping coupons and purchasing store brands to help ease the strain on the family budget. The net result: weak or declining sales on a department, category and same-store basis. Retailers should be highly selective about which categories get earmarked for price reductions in order to realize a sustainable volume competitive advantage.

Pricing these days is a balancing act. Cash-strapped consumers are pinching every penny and comparing prices across formats, forfeiting convenience for savings. Retailers have gamely responded by sharing cost concessions, but when retailers roll back prices en masse, two things happen: 1) no single retailer enjoys a competitive advantage from price cuts, merely maintaining parity with respect to traffic, and 2) category volume increases slightly, but not enough to offset the price decline.

Consumer packaged goods unit prices have nosedived in 2009. For example, as of March 2009, Nielsen research showed prices up 4.1% over the prior year, but dropping precipitously for the next few months as price increases ranged from just 1% to 1.9%. This stands in stark contrast to January results, marked by a 5.5% unit price increase across the store, more consistent with the aggressive 2007 and 2008 pricing patterns.

Handle with care
While food staples like cheese, milk and fresh eggs led the pricing pack in 2008, those price points proved to be highly perishable. Last year’s price leaders, according to Nielsen, became the biggest losers in 2009, with eggs scrambling to maintain profitability after a 23.8% price plunge to $1.63 per unit. A carton of milk sank 19.3% to $2.38 per unit, while cheese prices were shaved by 9.6% to $2.75 per unit.

Other poor performers among the 30 categories with the most dramatic unit price cuts were diet aids (slimmed down by 8.8%), baby needs (wiped out by 7.6%), fresh produce (a limp 6.5% decline in unit price), and shortening and oil prices (slid by 6.0%). Not a single category among those recording the greatest declines managed to eke out dollar sales growth. Conversely, five of the seven categories posting the greatest price increases realized dollar sales growth for the four-week period ending in July 11, 2009

Down, not out
Most economists agree that we can expect further contraction of the economy by approximately 2% for the remainder of 2009 and that waning consumer confidence will translate into less spending at retail and lower demand for manufacturers. The key to selectively—and strategically—lower prices is price elasticity of demand.

Nielsen research on pricing and promotion shows that most categories have a price elasticity much lower than -1.0, with most falling into the -.30 and -.70 range. For a sample category with a price sensitivity of negative .40, a price reduction of 10% converts into a unit sales increase of 4.3%, but a dollar sales decline of 6.1%. The recommendation then, is to be highly selective about which categories get earmarked for price reductions in order to realize a sustainable volume competitive advantage.

Clip it or click it
As retailers and manufacturers look to keep shoppers spending—and conversely, saving—they are leveraging ways to simplify the art of coupon clipping and clicking. Multi-tasking consumers are leveraging every possible vehicle for savings, with coupons enjoying an unprecedented resurgence. One reason is renewed reach and accessibility. Thanks to Internet, mobile phone and in-store kiosk distribution methods, coupon redemptions were up 23% for the first half of 2009, and redemption growth outpaced distribution, up by 20%. Key coupon activity stats from Inmar for the first half of 2009 show 188 billion coupons distributed and 1.6 billion redeemed.

The new generation of coupons reflects the immediacy of the media, with shorter expiration periods, fewer multiples and flat values. Food items represent the most active coupon segment and the 80/20 rule runs true to form: during the first half of the year—81% of units purchased with a manufacturer coupon were from just 19% of households. Both low and heavy coupon users have stepped up clipping activity, although all but the heaviest coupon user groups experienced negative total unit growth.

Winning numbers
Free-standing inserts (FSIs), a mainstay of the grocery channel, accounted for 89% of coupons distributed and 51% of coupons redeemed. The second largest category of redeemed coupons was electronic checkout at 10%, followed by instant redeemables at 9%, instant redeemable cross ruff (a coupon that’s on, or inside the packaging of, one product but good for another) at 6%, shelf pads at 5%, direct mail and handouts at 3%, in-packs and the Internet at 2%, and electronic discounts and in-ads at 1% each.

Internet coupon redemptions grew exponentially with a 308% increase over the prior year. Magazine on-page coupons (157%), instant redeemable cross ruff (177%) and direct mail (168%) enjoyed triple digit growth as well. While redemptions for FSIs were up 31%, only 0.5% of distributed FSIs were redeemed—a much lower redemption rate than what was experienced by all other forms except for magazine on-page coupons.

Well-heeled clippers
Coupon users represent an appetizing demographic comprising younger female heads of household (54 years old and under), larger households, and more affluent families ($70k+ annual income) who reside in areas designated as “comfortable country” or “affluent suburban spreads.”

Typically, coupon enthusiasts are frequent shoppers and bigger trip drivers who patronize most retail channels serving the consumer packaged goods industry. While non- and light-coupon users book bigger shopping trips—stocking up because of the lack of frequency—coupon enthusiasts represent the second biggest per-trip spenders in the grocery channel.

Store brands soar
In every downturn, there’s a beneficiary, and at grocery, it’s private label. For the year ending July 11, 2009, store brands hit an all-time high for dollar (16.9%) and unit shares (21.5%). Even as store brands continued to flex their marketing muscle in edible categories, they also racked up gains in the non-food, health & beauty and general merchandise departments. Lead brands—the number one or two brand when a store brand was the category leader—generally held their own against the onslaught of private label. Private label share gains were primarily at the expense of all other brands.

Store brand sales levels and growth are still skewed to edible categories, but store brand growth (not share) in non-food, health and beauty, and general merchandise departments has been generally stronger than brands. Store brand share development is greatest in commodity categories (e.g., milk and eggs) or those with little differentiation (e.g., first aid and pain remedies). As might be expected given their value positioning, store brand development lagged in categories with high levels of marketing support and those requiring high levels of innovation like beer, candy and health & beauty.

Accelerated development
What’s behind the surge in store brands? Which shoppers are most likely to purchase store brands at an account? Do their brand preferences differ by department or category? Shopper behavior across lead retailers within four different formats was analyzed, drawing on Nielsen consumer panel data.

Topline results reveal that the Kroger demonstrated the greatest—and most consistent—growth in store brand sales from low to very high spenders. Slower store brand growth was detected at Costco and Walmart, with Walgreens ringing up a second place ranking on store brand sales growth. In all four retailers, shoppers (even among very high-spend shoppers) are far more likely to seek branded offerings when shopping competitive retailers. Retailers need to understand if competitive shopping is driven by not having the right branded assortment in their stores or from competitors offering greater branded value or less store brand focus.

Walmart was the only retailer where their shoppers devoted a greater share of their total spend to store brands when shopping in competitive retailers.

While brands drive the majority of category dollar and unit sales, further store brand expansion is likely given the slow rate of economic recovery and the strong retailer focus against store brand label initiatives. Kroger, Walgreens, Walmart, SuperValu and other retailers have expressed the desire to expand store brand presence along with assortment cuts to reduce store clutter and improve store shopping experience. And retailer store brand focus has never been greater as there are better quality offerings, expanded assortment, and increased marketing muscle and support.

Small and mid-tier brands remain at risk from private label poaching as retailers push to shelve house brands. Unless these smaller brands are unique or niche brands, their manufacturers may initiate or expand into private label contracting or pursue direct-to-consumer options. In any case, these brands need to proactively leverage analytic insights to demonstrate why their brands are deserving of shelf space.

Tread carefully
A word of caution to retailers: don’t let price gaps between store brands and brands get so large that they drive declining category sales. While price decreases benefit consumers, both manufacturers and retailers would be rewarded with lower sales. And with more and more consumers turning to coupons in this tough economy, continue to make usage easier with increased distribution and delivery methods. Finally, promote store brands with brands where there is limited shopper overlap to drive category sales and along with non-competitive or complimentary branded offerings to build larger baskets.

SUMMARY: Throughout the world, the economic power of women is growing. As education levels are rising, incomes are following. Broadly defined, the global middle class will at least double in the next two decades and much of that growth will be spurred by two-income families as women enter the labor force in greater numbers throughout the less-developed world. While women in the more developed world will continue to find opportunities, developing nations will have the largest impact.

Over the next five years, the Boston Consulting Group (BCG) estimates that the global incomes of women will grow from $13 trillion to $18 trillion. That incremental $5 trillion is nearly twice the growth in GDP expected from China ($4.4 to $6.6 trillion) and India ($1.2 trillion to $1.8 trillion) combined. Globally, women are the biggest emerging market ever seen. Overall, men earn nearly twice as much money as women today, but that gap will shrink as more women enter the labor force and at higher wages than ever before. The vast majority of new income growth over the next ten years will come from women.

In control
According to BCG estimates, women control or substantially influence 65% of the world’s annual consumer spending—about $12 trillion. As today’s younger women enter the labor force at higher rates, they bring with them higher levels of education than any generation of women who have come before them. As they advance in their careers, their share of spending will grow, making women an even more important target for consumer marketers.

Global surveys of women, however, show that women feel vastly underserved by marketers. “Despite the remarkable strides in market power and social position that they have made in the past century, they still appear undervalued in the marketplace and underestimated in the workplace. Few companies have responded to their need for time-saving solutions or for products and services designed specifically for them”, says Michael Silverstein and Kate Sayre in the Harvard Business Review. In many cases, rather than truly listening to their female consumers, marketers have opted for the “make it pink” strategy.

Future income states
The United States provides a good case study for how the growing influence of women will eventually play out across many countries in the developing world in the near future. Almost all income growth in the U.S. over the past 15 or 20 years has come from women—while men have seen flat or even declining incomes. By around 2028, the average woman is projected to earn more than the average man in the U.S. A study reported in the Gotham Gazette shows that in some large markets, younger women are already out-earning younger men.

The average wages of 20-29 year-old women are higher than same age men in New York, Los Angeles, Chicago, Boston, Dallas and Minneapolis. In New York, young women earn 17% more than young men and 20% more in Dallas. In 1970, New York women in their 20s made about $7,000 less per year than men in their 20s. This gap had closed to parity by 2000 and today, young women make $5,000 more on average. As women age and grow in their careers, the overall gap between women and men will continue to shrink.

Career paths
Although there is still much to be done, women have made many other strides in the U.S. For the decade ending 2007, women increased their share of many prominent career positions: lawyers from 25% to 30%, physicians from 22% to 29%, and university faculty from 32% to 39%. Women’s participation in the military during the same period also grew from 12% to 14%. While these shares are far from parity and women are still significantly underrepresented in senior jobs—as the chart below indicates—there is continued progress.

Growth in incomes and career levels in companies is driven at least partly by education and the continuing removal of gender-based barriers to employment. Globally, half of all college students are now women. And in the U.S. and in the European Union, the majority are women (57% in the U.S., 55% in the E.U.).

Fundamental right
Literacy rates for women overall lag those of men across much of the less-developed world by 15–30 points. However, younger women have much higher rates than all women as shown in the chart below. As literacy rates have continued to improve for women across the board, the gap between younger women and younger men is in the single digits across almost all countries. For many developing countries, enrollment at the primary and secondary school levels is nearly equal for girls and boys. The gap at university level is still larger, but should continue to shrink as today’s young children grow older and are better prepared for university when they leave secondary school.

Changes in influence and spending
The battle for equality in the labor force for women is far from over, and a few years of a repressive régime can undo decades of progress, as can be witnessed now in some parts of the less-developed world. However, even small gains in education and incomes can have significant impacts on the marketplace for consumer products. As the incomes of women grow, so does the influence in how families allocate spending. And the services and products that women choose to purchase are substantially different than those purchased by households where the woman has less economic impact.

A number of studies in the more developed world have shown that women’s decision making power within a household varies based on her share of total household earnings, in particular her lifetime earnings. Women are more likely to purchase for the household and for the children, including food, healthcare, clothing, education, and personal care products. In households where men dominate the spending decisions, much higher shares are spent on alcohol, tobacco, and high status consumer goods. As women’s share of assets increases, the share of the family budget spent on alcohol, tobacco, and recreation tends to fall. The table below shows who controls spending for certain categories in the United Kingdom.

Increases in income in a family, whether coming from a man or a woman, tend to help the children, but the benefits are greater when a larger share of the increase comes from women. Children tend to enter school at an earlier age, especially girls. Nutrition improves and access to, and the quality of, healthcare increases. Savings rates also increase. All of this serves to better prepare the next generation, which reinforces economic growth.

In the developing world, Goldman Sachs’ The Power of the Purse: Gender Equality and Middle-Class Spending outlines a number of key categories that will see incremental growth from increases in spending autonomy for women—growth beyond what would be expected just given the size of their income increase. These include food (particularly higher quality and protein intensive foods), healthcare, financial products, education, childcare and consumer durables. As spending grows in these areas, growth in other categories—such as alcohol and tobacco—will be negatively impacted. Marketers who listen to their female consumers and create products that really meet their needs within these key categories will be able to reap substantial rewards.

Sources:

• The Real Emerging Market by Rana Foroohar and Susan H. Greenberg in Newsweek September 12, 2009
• The Female Economy by Michael J. Silverstein and Kate Sayre (Boston Consulting Group) in the Harvard Business Review September 2009
• No Quick Riches for New York’s Twentysomethings by Andrew Beveridge in the Gotham Gazette June 19, 2007
• The Power of the Purse: Gender Equality and Middle-Class Spending by Sandra Lawson and Douglas B. Gilman, The Goldman Sachs Group, Inc., August 5, 2009

Jane Crossan,Vice President, Practice Leader, Financial Services, The Nielsen Company

For the past six months we’ve seen and heard about the recovery of the U.S. market: the DOW has ticked up and the Fed chair has said the recession is “likely over.” But ultimately, the consumer will determine when our economy is back on track when you consider that consumer spending accounts for roughly 70 percent of U.S. economic activity. Until the consumer starts spending again, the recovery is likely to be slow and it may feel like we’re in a weak economy for some time. To get a closer look at the consumer’s financial outlook and their going-forward intent,  Nielsen Claritas surveyed more than 2,500 consumers, including 500 households that saw their personal financial institution impacted by a takeover or acquisition. What we found was that while the intensity of the economic panic had subsided since 2008, concerns persist and new habits in spending and saving are solidifying.

The new frugality
Similar to what we’re seeing with the outlook to the upcoming holiday season, the majority of consumers are saying this is just not the time to buy. When posed with a very simple fill-in-the-blank prompt: “At this moment, the time to buy the things you want and need is…” the panel responded heavily with “not so good.” Combine that with those who said the timing was downright “bad,” and you’re looking at 71% of respondents telling us they are no position to buy right now.

These responses underscore the consumer confidence index which began to drop in May and continued to drop through much of the summer. Even back-to-school shopping was lackluster despite a slight rise in that sector in August. The prevailing mood could likely be summed up by one respondent who noted bluntly: “I will not be making any large-item purchases for a long while.”

Spending and saving less
Between pulling back on spending and working to consolidate debt, the average consumer is getting squeezed.

In the past six months…

• One third say they have used credit less while…
• Only 13% say they have used credit more
• Consumers indicate they have controlled spending by using cash, debit and check as methods of payment
• 27% say they have saved less vs…
• 22% who say they have been able to save more
• 16% say they contributed less to retirement over the last 6 months

Even when conditions improve in the future, consumers are viewing the use of credit cautiously, with 30% saying they’ll use credit less. Savings will also continue to be a struggle as only 19% say they will be able to save more even when the economic storm clears.

The middle still feeling the pressure
In October 2008, concern about the economy was felt equally across the board, regardless of household net worth. Now, however, the higher net worth households seem to be faring better with their extreme concern almost cut in half. The two highest net worth brackets showed a noticeable drop in extreme concern compared to the lower three brackets, perhaps because homeowners with higher equity are less affected by recent drops in home values.

What’s interesting is the comparable concern in the middle and lower two brackets.  In fact, the middle bracket (those with a $100-249K net worth) expressed the highest amount of concern in 2008  and 2009, evidence that this is not a “poor man’s recession.” If anything, those in the middle are feeling the most pressure. These mid-net worth households  are likely comprised of  recent first home buyers who traded up at the peak of the market, or took equity out of their homes to fund other lifestyle choices.

Adding to that middle-class worry are growing concerns about personal finance matters at the heart of the American dream.

More than one third of consumers continue to be concerned about their mortgage or home value – not surprising given that recent data shows that one in eight mortgages is delinquent or in foreclosure – and the median sales price of existing home sales is down 16.8% over this time last year according to an Economic Snapshot at the time the survey was fielded. But the greatest concerns are around investments – specifically retirement portfolios as total family wealth has decreased since its peak in June 2007.

So while there may be less panic about the economy in general, these personal factors underscore what we’re hearing: the recovery for the consumer will be a longer, and more personal road back.

With the nation seemingly emerging from recession, American consumers remain skittish about spending their money during this upcoming holiday season according to new research from The Nielsen Company.  Households continue to focus on “essential gift giving” such as staple consumables, candy, beverage/alcohol and entertaining at home, and 86 percent said that they expect to spend the same or less this year than last — with a 7 percent increase in those indicating they would spend less.  Overall, Nielsen is projecting that holiday sales will rise 0.03 percent this year, accounting for $90 billion in dollar sales.

“Given everything the consumer has absorbed over the past 12 to 18 months, the fact that we expect this coming holiday season to be flat in dollars can be viewed as a modest positive,” said James Russo, Vice President, Global Consumer Insights at The Nielsen Company. “Americans have undergone a fundamental change in how they spend their money, and the days of stretching finances to make purchases not deemed as necessary are over, at least for the time being.  That said, our research has shown that consumers are looking forward to loosening their purse strings a bit, but only once they feel more confident about the state of the economy and their personal financial situation.”

Update: James Russo Discusses Holiday Spending on CNBC

Other key findings from the research include:

• Traditional items such as apparel, toys and technology will be most popular categories, albeit at restrained levels and primarily sold in “value” channels.
• Products aligned with at-home entertainment such as cookware, kitchen items, bed and bath accessories and alcoholic beverages will do well.
• Gift cards are one category where consumers plan to spend more this holiday season, followed by toys and apparel.
• Value retailers such as dollar stores, online, discounters and club stores will attract the lion’s share of holiday spending as consumers minimize trips and search for the best values, while office supply, pet stores, home improvement and drug retailers are likely to feel the brunt of the economic slowdown.
• Some 20 percent of households said that they had no plans whatsoever to entertain at home or away from home during the holidays.
• Spending cut-backs are being driven by all income groups.

So how can retailers make the most of this season? They need to recognize that U.S. consumers are, first and foremost, seeking value and will start their holiday shopping well before Thanksgiving.  They should also reach out to their best customers and make them feel special and give them a reason to shop at their outlet during the season and into 2010.   Successful retailing has always been about delivering the right product at the right price and in the right place.  The difference now is effectively mining and communicating to the right consumer as an active participant in driving growth.