Despite what is expected to be the slowest decade for population growth in the last 50 years, retail investors must continue to search diligently for markets whose continued growth offers the best chance for long-term success. Counter to popular belief on how the current economic conditions affect your future outlook, the good news is the largest markets in Texas are expected to experience healthy population growth over the next five years.

Everyone knows temperatures in Texas get hot, but based on recently published five-year population projections from Nielsen Claritas; you might be surprised to learn the biggest markets in Texas are projected to experience sizzling population growth–double digit growth. Which markets? Surprisingly, the biggest Texas cities–markets with populations exceeding one million people, will grow the fastest. Austin leads the way at 14.25%, Houston will grow another 11.12% and Dallas is expected to experience healthy growth of 10.97%. San Antonio isn’t far behind at 9.76%. This is particularly good news considering these markets are not experiencing the housing and foreclosure chaos gripping California, Florida and Arizona.

Since projected growth for the U.S. over the next five years is expected to be only slightly above 5%, it is encouraging to find solid growth opportunities in Texas. Maybe there is some truth to the saying “Everything is Always Bigger in Texas”. This claim is fueled by the fact that four of the largest Texas CBSA (Core Based Statistical Area) markets are projected to grow more than 10% or 2X times faster than the projected U.S. growth rate.

Given the strong relationship between market size and projected growth, savvy retail investors should take a serious look at Texas. The combination of sheer market size and future growth provide the best hedge against future risk.

Read more about how to evaluate population growth in the U.S. in the International Council of Shopping Centers (ICSC) Research Review.

Health Insurance

Given the proposal of a public health plan, consumers were asked if they would prefer a less-expensive yet less-comprehensive public health plan subsidized by the government to a privatized insurance plan that offered more benefits and flexibility. It appears that although the private plan was the plan of choice, many of the respondents (40%) could not commit to an answer without further information about what the details of the plan would include. It is imperative that health insurance carriers start to increase their brand awareness, value proposition and targeting efforts so that consumers make the most informed decisions once a public plan becomes available.

When we drill down into the penetration of different medical insurance types, the study notes that overall medical insurance is down slightly, but dental and vision insurance are higher — an interesting finding is that for both vision and dental, it’s the employer-based coverage that is down, but individual coverage is up-so when consumers lose their coverage from work, they fill that gap on their own. Heath Savings Accounts and Flexible Spending Accounts are also both up but not from individual plan purchases. In this case, employers are increasing benefits and stepping up these offerings. The same scenario is also true for critical illness coverage.

Property and Casualty Insurance

With regard to shopping and switching coverage, some consumers kept their options open to new offers, with 46% of the respondents saying they have shopped for auto insurance in the past three years. However, only one quarter of those respondents reported actually switching carriers during that time. In addition, only 16% of residential insurance customers changed carriers in the past three years.

Most respondents stated that they would be willing to pay a little more for auto insurance if it means they get better coverage; with 52% of the participants either strongly agreeing (15%) or agreeing somewhat (37%). Interestingly, 45% of the respondents said they actually did have their auto & home insurance policies with the same insurance company.

And good news for carriers who offer both auto and residential coverage to their customers: 62% of respondents would prefer to have their auto and residential insurance at the same carrier. The majority of respondents surveyed (73% selected 8-10 on a 10-point scale where 10 is extremely likely to recommend) said they would be extremely likely to recommend their primary auto and residential insurance carrier to friends and family. Insurance companies with a referral program will likely benefit from this feeling of satisfaction and goodwill.

Life Insurance

Despite the aging population, the percentage of households with life insurance policies has decreased steadily from 2005. Individual life policies have also experienced declines (i.e., whole, universal life and variable life) but individual term policies remained constant between 2007 and 2009 at 23%. Reasons for this could be that fewer employers are offering life insurance as part of their benefit packages or due to rising unemployment.

Agent recommendations and covering final/funeral expenses topped the list of reasons why individual life insurance policies were purchased. However, future channel preference for both types of policies moved away from the agent. More consumers want to purchase life insurance through direct channels and their employer compared to 2007.

Insurance companies will have to increase relationships with employers, offer alternative direct channel options and provide clear educational materials to make up for the lack of the personal relationship with the agent-particularly when trying to influence the decision to purchase these policies for the first time. With penetration rates for life insurance policies declining, insurance carriers will need to deal with multiple issues to grow this business, including a challenging economy, lack of importance as part of retirement and investment planning.

With the country in the grips of a recession, however, consumers are focusing on price more than where they purchase goods.  Recent surveys have reported a decline in corporate allegiance.  But all is not lost for companies who are willing to take a hard look at classic marketing tool – consumer segmentation – and applying its concepts in new and innovative ways. 

Best Buy, for example, launched a customer-centric program based on segmentation that now is at the heart of its corporate growth strategy.  By classifying its best customers into five consumer segments, targeting them with marketing and changing the way stores look and training associates in new ways, the company has posted same-store sales growth in excess of 9 percent – more than double that of outlets that haven’t converted to the model and no small feat given the current economic challenges.

Nielsen has been at the forefront of consumer segmentation since the 1970s; its PRIZM system draws on a range of U.S. Census data and market research to classify all 114 million U.S. households into one of 66 consumer types.  Systems like PRIZM can help companies build stronger relationships with customers through tailored marketing and help them retain consumer loyalty, even when conditions are less than ideal.

Read more about how consumer segmentation works and can help innovative companies develop a competitive edge in the new edition of Consumer Insight.

While consumers are generally on board with energy conscious products, their green behavior has yet to extend to their habits in monitoring and paying for the energy in their homes.

Services offered by local utilities such as whole house energy audits, energy efficient HVAC rebates and weatherization services were only used by 2 percent of respondents in the past year. Energy efficient appliance rebates were used by 4 percent.

Similarly, online energy services, such as real-time pricing, load management, and service consumption monitoring were adopted by only 3 to 5 percent of consumers in the past year.

With the energy industry poised for major changes, including a heavier reliance on technology in monitoring and delivery, the report emphasizes that energy providers have major opportunities if they can educate their customers to become more active in their energy use.

Respondents showed a continued interest in energy-efficient equipment in the home, with 25 percent of consumers having purchased an Energy Star certified appliance, lighting product, or heating or cooling equipment in the last year. However this percentage fell from 27 percent last year.

Energy conserving compact fluorescent light bulbs (CFLs) have shown strong adoption with 71 percent of consumers using at least one bulb in their homes. Nearly a third (30 percent) of those surveyed said they are using more than six.

One indicator that going green is not just a trend for younger consumers is that CFL use appears to increase with age. While 64 percent of those aged 18 to 34 are using the bulbs, so are 70 percent of adults 35-54 and 74 percent of consumers 55 and older.

Ownership of CFLs is highest among those with higher income and education levels, with 76 percent use among those making over $100,000 a year.

Download the complete Convergence Audit.

Top 10 Counties with the Highest Percentage Decrease in Median Home Value from 2007-09

Of the next ten counties, all were located in California or California, except for Pinal County, Arizona and Clark County, Nevada.

Read the full press release here.

For the sixth year in a row, the top location is Myrtle Beach, South Carolina, despite its index ranking falling more than 100 points in the last year.  Hot on its heels is Fort Walton beach, Florida, where restaurant spending has increased over the last 12 months.  Rounding out the top five are Flagstaff, Arizona, Atlantic City, New Jersey and Ocean City New Jersey.  Top movers – up and down – were Corpus Christi, Texas, which jumped up 25 points, and Napa, California, which dropped 14 spots.

“Obviously, one must consider a range of factors when determining where to locate a new restaurant.  But the RGI can be a valuable tool that provides a data-based way to evaluate and compare different towns and cities.  One must look at the ranking and the size of the market and then decide which metro area might be best suited for a particular concept,” said Terry Munoz, Vice President at Nielsen Claritas.

The RGI uses a formula to identify restaurant spending and gaps in spending per capita compared to a national average.  The score is calculated on an area’s total restaurant sales and sales as a percent of income, at a per capita level, compared to the nation as a whole.

Top 25 Cities to Open New Restaurants

According to Nielsen Claritas, they might start by taking a closer look at large, fast-growing metro areas, like Atlanta, Dallas, and Phoenix. 

These three markets ranked as the top three fastest growing U.S. markets in the last eight years — and could offer the retail industry some hard-to-come-by expansion opportunities, Nielsen reported in a new study released Monday.

“While some of these markets like Phoenix and Los Angeles have been hard hit by the recent wave of foreclosures, there has been no mass exodus from these markets or anywhere else.  People who have foreclosed most likely have not left the market but rather have just become renters,” Mike Mancini, Vice President of Data Product Management, Nielsen Claritas, and co-author of the new study, noted.  “Faltering markets, such as these, will likely rebound and continue to grow — and their underlying demographics are solid.”

As part of the study, Nielsen also identified seven key factors that correlate strongly with fast-growing, high-potential retail markets:

1) large land areas
2) booming suburban rings
3) widespread affluence
4) a growing Hispanic population
5) diversified employment
6) long commutes
7) the presence of lifestyle shopping centers

These indicators can be combined with demographic projections to identify markets that are likely to lead the way to economic recovery in the coming years.

In the meantime, according to Nielsen’s study, retailers looking for expansion opportunities should focus on booming college towns and resort locations, like Las Vegas, Austin, Texas, and Bend, Oregon; underdog college towns, like Columbia, Missouri, Corvallis, Oregon, and
Greensboro, North Carolina; knowledge worker havens, like Los Alamos, New Mexico, San Jose, California, Boulder, Colorado, and Minneapolis; and up-and-coming communities, like New Orleans, Coeur d’Alene, Idaho, and Brownsville, Texas.

View the study and accompanying press release and presentation. 

Download Nielsen Claritas’s October 30 Webinar, “New Leading Indicators of Growth — Finding Opportunity in a Slow-Growth Environment.”

Learn more about finding growth in challenging times, in the December issue of Nielsen’s “Consumer Insight” online newsletter.

Of 3,000 people surveyed by Nielsen in early October, 84% reported being just as confident — or more so — in their primary financial institution as they were six months ago.  Ninety-five percent of those surveyed said they consider their financial assets at their primary bank to be relatively safe.

Although they remain confident in their personal banks, a significant percentage of the respondents said they had already been adversely affected by the current financial crisis. 

Twenty-five percent reported significant losses in their retirement savings.  Among consumers age 55 and older, that percentage was even higher: 29%. 

Another 19% told Nielsen their credit card debt had increased.  That trend was especially prevalent among younger respondents: 25% of 18-34 year olds in the study reported growing credit card debt.

Still, most respondents (88%) — especially older consumers — said they aren’t planning to change their current banking and investments relationships in the near term.

View the full press release.

Read coverage of Nielsen’s findings in USA Today.