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Deloitte: Shoppers’ Belts Remain Tight Despite Economic Improvement

National brand loyalty slides third consecutive year; consumers want household and grocery clicks before trips

NEW YORK, April 16, 2013, Even as the economy improves, 94 percent of Americans indicate they will remain cautious and keep their spending for food, beverage and household goods at its current level, according to Deloitte’s 2013 American Pantry Study.

More than nine in 10 (92 percent) consumers surveyed indicate they have become more resourceful, and 86 percent say they are getting more precise in what they buy — attitudes that have remained consistent in the three years Deloitte has conducted the study, and across income levels.

Despite enduring frugal attitudes, few consumers feel they are making any compromise: More than seven in 10 (72 percent) consumers indicate that, even though they are spending less on household and grocery items, it doesn’t feel like they are sacrificing much, a seven percentage point increase in two years.

Nearly nine in 10 (88 percent) survey respondents report they have found several store brands that they feel are just as good as national brands, and few consumers plan to switch back to national brands: Only 27 percent plan to do so as the economy rebounds, an eight percentage point decline from the previous year.

“One of the most notable year-over-year trends in the study is how embedded frugality has become due to the recession,” said Pat Conroy, vice chairman, Deloitte LLP and consumer products sector leader. “Prudent consumers and improving perceptions about store brands are squeezing national brands’ position. The gap between the few ‘must have’ brands on shoppers’ lists and others on the shelf may be widening, making it more important for brands to differentiate through innovation, quality and performance. Consumer product companies may also consolidate low and mid-level performers and shift investment to the category leaders.”

Brand loyalty declines, shoppers put experimentation on hold

As store brands become more entrenched in the pantry, brand loyalty continues to slide, however consumers appear to be selectively loyal to certain brands.

Brand loyalty dropped for the third consecutive year in the survey. When asked why certain brands are no longer a priority for their households, consumers cited “other brands are available on sale” as the No. 1 reason. However, brands to which consumers are most loyal significantly outpace their lower performing counterparts by 20 or more percentage points on attributes such as performance, experience and trust.

Consumers have also honed in on select brands they will consider. More than eight in 10 (84 percent) consumers say they have a specific set of brands in mind, and will purchase whichever one is on sale. When using coupons, 71 percent indicate they will use them only for items they would have purchased anyway.

Shoppers are also selective about the retail channels where they are willing to purchase certain items. Consumers surveyed shop an average of 2.5 channels in each product category, compared with an average of 5.5 channels (including grocery, mass merchandise, club, drug, convenience, dollar, neighborhood market and online) for all of their food, beverage and personal goods combined.

Loyalty cards’ importance in consumers’ cross-channel shopping has increased, as the number of consumers with three or more grocery loyalty cards has grown from 28 percent in first American Pantry Study in 2010 to 39 percent in the most recent survey.

Additionally, 58 percent of shoppers surveyed use shopper loyalty cards in grocery stores every time they shop, up 14 percentage points in two years, and 30 percent participate in a loyalty program via their smartphone while shopping in a store. Consumers appear to feel a sense of reward from these efforts: Eight in 10 (80 percent) say it is fun to see how much money they can save by using coupons or a shopper loyalty card.

Online options in demand for household goods, grocery; Mobile shopping interest growing fastest among baby boomers

The 2013 American Pantry Study reveals an unmet demand for online shopping options, particularly for in-store pickup and at-home delivery. While 14 percent of shoppers surveyed currently buy consumer products online and pick them up in the store, 43 percent indicate they would like to do so, with strongest demand appearing in food and beverage categories for in-store pickup.

Approximately one in 10 (11 percent) survey respondents purchase online with home delivery, and the number rises to 34 percent among those who would like to do so, primarily for household goods such as laundry soaps and tabletop disposable paper products.

“Consumers are drawn to the convenience of purchasing frequently-used food, beverage and household items online, and brand preferences will likely extend into their online buying habits,” added Conroy. “Consumer product companies can use mobile and online channels to strengthen the functional and experiential brand attributes that translate into conversion and loyalty. They should consider aligning their digital efforts with consumers’ location and context to reach shoppers online and on their phones, blending into their list-making, meal planning, product and price-checking, family activities and health and beauty routines. They may also market channel-specific product offerings and use these platforms to make product suggestions based on target consumers’ prior shopping behaviors.”

The latest American Pantry Study also indicates that interest in mobile technology is growing at a higher rate among baby boomers than younger consumers. Nearly one-quarter (23 percent) of respondents age 45 to 70 indicate they are interested in using mobile coupons they can scan at the checkout, up from 12 percent in last year’s survey, compared with a six percentage point increase among respondents age 21 to 29.

Shoppers surveyed are tapping into their smartphones outside the store nearly as often as they do inside the store. Three in 10 (30 percent) consumers manage a shopping list or recipe while in a store, just three percentage points higher than those who do so offsite during the shopping process.

For more information about the 2013 American Pantry Study, including in-depth survey findings, please visit: http://www.deloitte.com/us/pr/2013APS

About the Survey

The 2013 American Pantry Study was commissioned by Deloitte and conducted online by an independent research company in January 2013. The survey polled a sample of 4,047 consumers and has a margin of error of plus or minus two percentage points.

About Deloitte’s Consumer Products Practice

Deloitte is a leading presence in the consumer products industry, providing audit, consulting, risk management, financial advisory and tax services to more than 80 percent of the Fortune 500 consumer product companies. Delivering insights on the latest consumer product issues, effective practices, technology and operating procedures, Deloitte serves companies across multiple categories including food and beverage, apparel and footwear, personal care, and household products. For more information about Deloitte’s consumer products practice, visit: http://www.deloitte.com/us/consumerproducts

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

SOURCE:

Deloitte
http://www.deloitte.com/us

 

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Goodwill® Sponsors Thrift Store Project: Documenting America’s Consumption Patterns

All Thrifty States Documents Positive Aspects of Secondhand Shopping

ROCKVILLE, Md., April 10, 2013, Goodwill Industries® is proud to serve as an educational partner and sponsor of All Thrifty States: A Visual Journey through America’s Collective Closets, a documentary photo project and upcoming book that will focus on how consumers’ purchases of previously used items are not only healthy for the planet, but they are an answer to the consumerism that has pushed Americans’ spending habits to the max.

The project is run by Jenna Isaacson, a Washington, DC-based independent visual journalist and lover of all things thrift. She will travel the country to document consumerism in the country and the toll it has taken on valuable resources and financial stability. Isaacson, who grew up thrifting with her grandfather in Illinois and Florida, will travel cross-country and search for treasures at Goodwill stores in Albany, NY; Baltimore, MD; Burlington, VT; Charlotte, NC; Charleston, WV; Cleveland, OH; Columbia, SC; Columbus, OH; Concord, NH; Detroit, MI; Morgantown, WV; Pittsburgh, PA; Portland, ME; Richmond, VA; Savannah, GA; Scranton, PA; and Stratford, NJ, photographically documenting the goods that can be found at Goodwill stores. When not visiting a Goodwill store, Isaacson will visit thrift stores that support local community efforts, including animal shelters, domestic violence shelters, hospices, hospitals, and services for people who are homeless. In the process, she will be encouraging a more ‘second-hand’ consumer lifestyle. Goodwill is sponsoring Isaacson’s transportation, a fuel-efficient hybrid vehicle. BALCON Enterprises, a Gaylord box and bulk bag manufacturer, and supplier of packaging supplies used by various Goodwill agencies throughout the United States, is also sponsoring the project due to its commitment to environmental sustainability and Goodwill’s mission of providing job training for people with disabilities and disadvantages through the revenue from the sale of donated goods.

“With the economic paradigm shifting rapidly towards reuse and repurpose, showcasing America’s thrift stores, particularly Goodwill stores, is a great way to engage Americans’ creativity,” said Jim Gibbons, president and CEO of Goodwill Industries International. “Jenna is taking her passion for donated goods and educating the public on the tie-in between donations and environmental sustainability. She’s also disproving negative stereotypes about thrift stores and bringing light to the Goodwill mission and sharing her knowledge of the benefits of second-hand living.”

Isaacson, who departed from Washington, DC, on her thrifting expedition, intends to raise awareness about the positive aspects of second-hand shopping in local communities while also demonstrating the benefits of donating, including shrinking landfills, reducing clutter, saving money for municipalities and boosting the economy. Isaacson’s trip will complete 48 of her 50 “thrifty” states. Her first trip was in June 2011, and she crisscrossed the country visiting more than 60 thrift stores, including 32 Goodwill stores in 30 states and traveling 10,200 miles.

“With All Thrifty States, my goal is to not only make an impact on the environment but to provide a window on the story of America’s communities through the observation of things they once owned,” said Isaacson, founder of All Thrifty States. “Goodwill stores are one example. The stores contain a distinct variety of items that are reasonably priced, stylish, fun and say a lot about the communities that surround them.”

For more information, visit http://allthriftystates.com or Twitter: @AllThriftyState and Facebook: https://www.facebook.com/pages/All-Thrifty-States/112781348732621.

ABOUT GOODWILL INDUSTRIES INTERNATIONAL

Goodwill Industries International is a network of 165 community-based, independent agencies in the United States and Canada with 14 affiliates in 13 other countries. Goodwill is one of America’s 25 most inspiring companies (Forbes, 2012). Goodwill agencies are innovative and sustainable social enterprises that fund job training programs, employment placement services and other community-based programs by selling donated clothing and household items in more than 2,700 stores and online at www.shopgoodwill.com. Local Goodwill agencies also build revenue and create jobs by contracting with businesses and government to provide a wide range of commercial services, including packaging and assembly, food service preparation and document imaging and shredding. In 2012, more than 4 million people in the United States and Canada benefited from Goodwill’s career services. Goodwill channels 82 percent of its revenues directly into its programs and services. To find a Goodwill location near you, use the online locator at locator.goodwill.org, or call (800) GOODWILL. Follow us on Twitter: @GoodwillIntl or @GoodwillCapHill, and find us on Facebook: GoodwillIntl.

SOURCE:

Goodwill Industries International

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Annual Car Sales Strength Expected To Slow Following Three-Year Trend Of Double-Digit Growth, According To Kelley Blue Book Analysts

Industry Sales Will Continue to Outpace Economic Growth; Affordable Pricing and Credit Environment Keeps Consumers Coming Back

IRVINE, California, Feb. 13, 2013, New-vehicle sales are expected to grow nearly 6 percent in 2013 to 15.3 million units overall, breaking the three-year trend of double-digit sales growth that has persisted since 2010, according to Kelley Blue Book www.kbb.com, the leading provider of new and used car information.

“Although the sales pace is expected to slow this year, automakers have demonstrated that they can generate solid profits with sales at current levels, which is a strong indication that they will remain disciplined by continuing to match production to meet demand,” said Alec Gutierrez , senior market analyst of automotive insights for Kelley Blue Book . “Sales growth won’t come easily, especially considering the challenges facing the industry in today’s economy. While economic growth is expected to arrive slowly in 2013, there are several indications that point toward solid auto industry sales growth in the years ahead.”

Among the various factors contributing to the ongoing recovery, Kelley Blue Book believes that pent-up demand, high used-vehicle values, improving credit availability and low interest rates all have played a direct role in the auto industry’s ability to outperform the economy. Each of these factors has been critical to-date and will continue to drive sales this year and beyond.

Kelley Blue Book: New-Car Sales to Hit 15.3 Million Units in 2013

2007

2008

2009

2010

2011

2012

2013

Annual Sales Volume   (Millions)

16.1

13.2

10.4

11.6

12.8

14.5

15.3

Auto Industry Sales Will Continue to Outpace Economic Growth
The economy has come a long way since nearly collapsing in late 2008, yet a long road to recovery remains. At the depths of the recession in 2009, the unemployment rate hit a 30-year high of 10 percent, new-vehicle sales hit a 30-year low of 10.4 million units, and the Conference Board’s Consumer Confidence Index hit an all-time low of 25 (for perspective, in 1985 the index was at 100). Some feared the onset of a second Great Depression in 2009, and while a repeat of the 1930s doesn’t appear to be in the cards, the nation still has a long way to go before the economy is completely back on its feet.

Today unemployment remains at an uncomfortably high 7.8 percent, while consumer confidence is below 60, which is notably better than in 2009 but well below the 4.5 percent unemployment rate and 100+ consumer confidence readings from 2007. This is important to note since 2007 was the final year of a 10-year span in which the auto industry consistently posted sales of 16 million units or more. Although the economy has recovered slowly and still has a long way to go before unemployment and consumer confidence are back to levels last seen in 2007, Kelley Blue Book doesn’t see a reason why auto sales cannot continue to outperform the pace of the economic recovery.

“Looking at the historical relationship between unemployment and auto sales from the 1980s through 2007, unemployment would need to be below 6 percent to generate auto sales of 16 million units or more,” said Gutierrez. “According to estimates from the Federal Reserve, unemployment only will drop down to 7.4 percent in 2013 at best; a point that would historically justify sales of only 13 million to 14 million units. However, since 2010, new-car sales have outperformed their traditional relationship with unemployment, which means that sales in excess of 15 million units clearly are attainable.”

Auto sales also have outperformed their historical relationship to consumer confidence by a significant margin. Despite expectations for consumer confidence to remain well below levels historically required to justify sales of 15 million units or more, Kelley Blue Book believes auto sales will continue to grow as predicted provided that consumer confidence remains stable.

Pent-Up Demand Drives Growth Since 2010, Will Persist in 2013
While economic growth has remained relatively weak and only explains part of the auto sales recovery, Kelley Blue Book sees pent-up demand playing a more critical role in the rebirth of the industry. According to Polk, registered vehicles in the United States are 11 years old on average; the oldest ever recorded. The increase in vehicle age can be attributed to two key trends. First, vehicles have grown much older as consumers have opted to hold onto them longer, due to the weakened economy. Consumers have focused on deleveraging after the collapse of the real estate bubble, and unless they require a replacement or the model no longer meets the needs of its owners, many are choosing to hold on to their vehicle rather than acquire additional debt to purchase an all-new vehicle. This leads directly to the second major influence of increased vehicle age, which is improved vehicle quality.

Aging Vehicles to Continue to Generate Demand in 2013

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Avg. Registered

Vehicle Age

8.9

8.9

9

9.1

9.4

9.5

9.7

9.8

10

10.3

10.6

10.8

Source: Polk

“Vehicles produced during the past few model years are significantly higher in quality than those produced in previous decades,” said Gutierrez. “In the 1990s, consumers came to expect a vehicle produced by a Japanese manufacturer to last 100,000 miles and beyond. Now we can say the same about vehicles produced by all manufacturers. Whether shopping for a Toyota, Honda, Chevrolet, Ford or Hyundai, consumers can be reasonably assured that their vehicle will hit 100,000 miles with ease, and 200,000 miles or more with proper maintenance and care.”

With consumers delaying the purchase of a new vehicle due to economic hardship and improved vehicle quality, Kelley Blue Book expects the average age of vehicles on the road to continue to increase. As vehicles continue to get older and economic conditions slowly improve, buyers are expected to continue to return to market.

Leasing to Aid Sales Growth in 2013
When auto sales hit their low point in 2009, leasing all but dried up. The lack of lease returns during the past several years has played a pivotal role in the used-vehicle supply shortfall that has driven used-vehicle values to record highs. The reduced lease returns also have limited the number of consumers that traditionally would be seeking a new vehicle at the end of their lease term. While this reduced the number of in-market shoppers in recent years, Kelley Blue Book anticipates this trend to begin to reverse in 2013. Leasing bounced back in 2010, increasing nearly 700,000 units year-over-year. Kelley Blue Book believes that the return in leasing will generate as many as 300,000 additional in-market shoppers this year, a number that will increase in 2014 and beyond. With lease returns expected to approach more normal levels during the next few years, Kelley Blue Book anticipates new-vehicle sales to grow and used-vehicle values to soften.

Kelley Blue Book: Increase in Lease Returns to

Drive Boost in Demand for 2013

2006

2007

2008

2009

2010

2011

2012

Total

Vehicles

Leased

2,446,569

2,453,189

1,935,910

1,083,619

1,709,149

1,960,128

2,284,800

Source: Kelley Blue Book Automotive Insights

Affordable Pricing and Credit Environment Keeps Consumers Coming Back
Consumers looking to purchase a new vehicle in 2013 will find affordable pricing on some of the best vehicles being produced today. On average, consumers can expect to find new vehicles priced at approximately 94 percent of MSRP, not including incentives. Not only are transaction prices quite favorable for consumers, but interest rates also remain at historically low levels.

“Consumers with a solid credit history should have no trouble obtaining a loan for 3 percent or less for up to 72 months,” said Gutierrez. “Many automakers continue to offer loans of zero percent for up to 60 months, as well as rock-bottom lease payments around $160 per month for a compact and only a few dollars north of $200 per month for a mid-size.”

Leases accounted for approximately 18 percent of all vehicles sold in 2012, returning to levels regularly seen prior to the collapse in industry sales in 2009. Federal Reserve Chairman Ben Bernanke indicated that interest rates will remain near zero through at least 2015, so consumers looking for a new vehicle can expect to find affordable pricing on new models for several years to come.

The affordability of new vehicles has been made even more attractive by the high values maintained by used cars. Although approximately 8 percent below the all-time highs seen in 2011, late-model used-car values remain uncomfortably close to new-car transaction prices, influencing many consumers to purchase new rather than used. This phenomenon is most pronounced for high-demand vehicles such as subcompact, compact and mid-size cars. These vehicles all have been significantly upgraded in recent years and generate excellent fuel economy for an affordable price. As a result, they have maintained extraordinarily strong values in the used-car market. In fact, the difference between a five-year payment on a new car and a 1- to 2-year-old used model is as little as $30 per month apart in some cases. Kelley Blue Book expects used-car values to continue to ease from current highs, so this phenomenon likely will play less of a role in the years ahead.

Kelley Blue Book: New-Car Pricing Remains

Near Used-Car Pricing

MY2013
(New)

MY 2012 (Used)

MY2011

MY2010

MY2009

MY2008

Average Monthly

Payment for a Compact

$335

$302

$280

$253

$224

$202

Source: Kelley Blue Book Automotive Insights

For more information and news from Kelley Blue Book ‘s KBB.com, visit www.kbb.com/media/, follow us on Twitter at www.twitter.com/kelleybluebook (or @kelleybluebook), like our page on Facebook at www.facebook.com/kbb, and get updates on Google+ at https://plus.google.com/+kbb/.

About Kelley Blue Book (www.kbb.com)
Founded in 1926, Kelley Blue Book, The Trusted Resource®, is the only vehicle valuation and information source trusted and relied upon by both consumers and the industry. Each week the company provides the most market-reflective values in the industry on its top-rated website www.kbb.com, including its famous Blue Book® Trade-In and Suggested Retail Values and Fair Purchase Price, which reports what others are paying for new cars this week. The company also provides vehicle pricing and values through various products and services available to car dealers, auto manufacturers, finance and insurance companies as well as governmental agencies. KBB.com provides consumer pricing and information on cars for sale, minivans, pickup trucks, sedan, hybrids, electric cars, and SUVs. Kelley Blue Book Co., Inc. is a wholly owned subsidiary of AutoTrader Group.

SOURCE:

Kelley Blue Book

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AIA Sounds the Alarm on Economic Downturn Report

Statement by Marion C. Blakey, President and CEO of the Aerospace Industries Association on reports of the contraction of the U.S. economy in the 4th quarter of 2012.

ARLINGTON, Va., Jan. 30, 2013, The contraction of the U.S. economy in the fourth quarter underscores AIA’s warning for the past 18 months that severe across the board budget cuts—both to defense and non-defense discretionary spending—threaten to throw the economy into a tailspin. It is clear from the Commerce Department report that reduced government spending, primarily in the defense sector, is a major cause for the GDP decline. In July 2011, Congress enacted a cut of $487 billion to the defense budget, resulting in ongoing, significant job losses in the defense sector.

In less than 30 days, unless Congress and the White House act, sequestration will kick in, leading to higher unemployment, reduced tax revenue and lower consumer spending. This will be the second wave that overwhelms our floundering economic boat, likely sinking us back into a recession.

As recently as today, Chuck Hagel, nominee for the position of Defense Secretary, said, “[Sequestration] would harm military readiness and disrupt each and every investment program. I urge Congress to eliminate the sequester threat permanently and pass a balanced deficit-reduction plan.”

Sequestration threatens both America’s national security and economic health. Congress and the White House need to focus on a solution that addresses the deficit problem smartly, through a balanced, bipartisan approach that doesn’t cripple our economy and hamstring our national security.

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Founded in 1919 shortly after the birth of flight, the Aerospace Industries Association is the most authoritative and influential trade association representing the nation’s leading manufacturers and suppliers of civil, military and business aircraft, helicopters, unmanned aircraft systems, space systems, aircraft engines, missiles, homeland and cybersecurity systems, materiel and related components, equipment services and information technology.

SOURCE: Aerospace Industries Association

RELATED LINKS: http://www.aia-aerospace.org/

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