Results from a just-released consumer spending study by leading market information company The NPD Group, Inc. indicate a significant increase in consumer optimism as measured by discretionary spending intentions for May-July, 2003. Fielded to NPDs online consumer panel between April 29 – May 6, 2003, the NPD study of consumer spending is a post-war wave of an identical study conducted prior to the war (March 4-11, 2003).
NPD reports 19 percent of consumers claim they are planning to spend more than usual during the months of May, June and July (vs. 14 percent of consumers in the pre-war survey). Thirty-four percent of consumers said they plan to spend less than usual this May, June and July, a significantly smaller group than the first survey when 41 percent said they would spend less than usual. Forty-seven percent of consumers said they plan to spend about the same as usual in the next three months (vs. 45 percent of consumers in the pre-war survey). Consumers aged 35-54 with children had the most positive shift in spending outlook. Thirty-two percent said they plan to spend less than usual over the next three months vs. 42 percent who planned to spend less before the war.
The war in Iraq effectively changed the influencers of consumer discretionary spending and shifted focus onto the economy and personal economic situation. The price of gasoline, the economy and personal employment situation were the top three factors affecting spending intentions prior to the war. After the war, 43 percent of consumers still rank their own employment as a major factor in discretionary spending. Forty-two percent of consumers are telling NPD that personal debt is a key factor impacting their future spending intentions.
Most other factors such as the price of gasoline (27 percent post war vs. 46 percent pre war), terrorism (4 percent post war vs. 13 percent pre war) and international government relations (6 percent post war vs. 12 percent pre war) have decreased significantly.
The war with Iraq seems to have created a bump in patriotic purchasing among younger consumers. Twelve percent of 18-34 year olds without children said they plan to buy much more American-made products in the next three months. When asked the same question in March, nine percent said they plan to purchase more American-made products. Plans to purchase much more “Made in the USA” products decreased slightly among the 35-54 without kids and 55+ groups. Fifteen percent of 35-54 year olds with kids planned to buy much more American-made products. This is down from 17 percent before the war. For the 55+ age group, 18 percent said they plan to purchase much more American-made products in the next three months, this compares to 19 percent before the war.
Although consumers have a more positive spending outlook overall, they are not yet clear where they will spend more money. Intentions to spend less than usual on discretionary products/services decreased from 41 percent pre war to 34 percent post war, yet there is no significant change in intentions to spend less or more on a specific product or service category. In fact, the pattern is the same as before the war, with the exception of restaurants. Consumers told NPD they are leaning towards eating out more often as 20 percent vs. 24 percent before the war said they plan to spend much less than usual. Consumer intentions to spend money on automotive products such as oils, waxes and parts (19 percent) is similar to restaurant spending (20 percent) and clothing (20 percent) where consumers are not as likely to spend much less on these items vs. higher-priced items.
Methodology
Wave 2 of the NPD Consumer Spending Survey was fielded April 29 to May 6, 2003. It was e-mailed to 5,000 members of the NPD online consumer panel. The findings presented are based on information from 2823 completed surveys. The margin of error at the 90 percent confidence level is 1.6 percent.
About The NPD Group, Inc.
Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why to help our clients make more successful, fact-based business decisions. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business and positively impact sales and revenues. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games.
For more information:
Sean P. Dolan
sean_dolan@npd.com
516-625-2288
