Accenture Study Says Consumers Shifting from "Economy" Retailers

The drift away from bargain retailers may have begun despite the depth of the recession, as an Accenture study indicates that fewer consumers are shopping at bargain-oriented stores.

Bargain retailers have been a refuge in the recession, drawing consumers who might not have shopped them in better times. Still, retail observers expect many consumers in a recovery to again start shopping favorite stores they fled because of recession-related concerns regarding lower incomes and job losses. The question remains just how much trading up they will do.

In the Accenture study, 38 percent of respondents reported shopping in what the consulting firm refers to as economy stores versus 42 percent in 2008. Additionally, the proportion of consumers altering their grocery shopping behavior due to the economy shrank to 68 percent versus 72 percent in 2008, although 61 percent said they were spending less on name brands, suggesting that they remain private label boosters. However, the proportion of consumers waiting for a sale rather then purchasing at full price declined to 57 percent from 62 percent and those opting to buy less expensive clothing slipped to 27 percent from 29 percent.

The trading down trend in the recession gave Wal-Mart, closeout specialists such as TJX, warehouse clubs and dollar stores a chance to win over consumers who had previously shopped more upscale retailers even as it helped boost their sales and earnings. By cleaning up stores and making product assortment changes, the bargain retailers have been doing their best to hold their newly won customers, even if the Accenture study demonstrates they already are losing some.

What's particularly surprising is that the shift in shopping behavior has occurred in the face of a Conference Board consumer confidence index that slipped to a rating of 49.3 in June from 54.8 in May. Consumers expressed less confidence in their present circumstances, with the board's index falling to 24.8 from 29.7 in May, and in their expectations of the immediate future, falling to 65.5 percent in June versus 71.5 a the month earlier.

The difference between mood and activity is evident in the Accenture study, too. In that reckoning, 52 percent of respondents said their situation has worsened over the past year. One result is that 62 percent admit that they are buying fewer socially conscious products, such as organic or sustainably sourced items. Rather they are taking care of basics, with 58 percent placing price as their top consideration in purchasing groceries, for example, followed by nutrition at 32 percent. Brands and convenience have each fallen to a five percent priority rating.

While the Accenture shopping behavior trends are looking better for retailers such as Macy's, J.C. Penney and Target that have lost shoppers in the downturn, the shifts are mostly small, which suggests that only a portion of consumers are ready to shake off the recessionary gloom and doom, and not every sector of the marketplace has been hit equally hard. The so-called economy retailers still have some time to convince consumers that they represent a viable alternative even in better times, as Accenture numbers tracing mood still have most consumers in a mental state that should sustain frugality.