Insights Into the Changing U.S. Consumer Market

Navigate the Global Economy™ 1

INSIGHTS INTO THE

CHANGING US

CONSUMER MARKET

2008…… Going Forward

Presented by SIS International Research

2008

SIS International

Custom Research


OUTLINE OF PRESENTATION

! SIS Insights – The Changing US Consumer Market

! SIS Capabilities and Industry Expertise

! Our Research Methods and Capabilities

! SIS Online Research Panels

! Benefits of Using SIS International Research


SIS INSIGHTS

THE CHANGING US CONSUMER


SIS INSIGHTS – THE CHANGING USCONSUMER

• Market Drivers:– The Aging Baby Boomers

– What happened to Generation X?

– The Powerful Force of Generation Y

– Growing Hispanic Culture and Market Segment

– Changing US Shopping Patterns

– Changing US Retail Distribution Patterns


BABY BOOMERS

• The Aging Baby Boomers:– Post World War II births 1946-1964

– Approximately 77 million people

"High level of income [$64,700 Median Household Income]

"High level of education [46% are college educated

"High percentage of home ownership [57% home ownership]


BABY BOOMERS (cont.)

• The Aging Baby Boomers (cont.)

– Most do not want to retire in their 50’s and 60’s

• Over 80% intend to keep working, and 56% of them hope to do soin a new profession. For many, the new job would be in communityservice

– Many are currently being downsized from companies

– 16.4% or 5.6 million of Baby Boomer workers aged 50+, were self-employed.



• Implications of the Aging Baby Boomers– Increased mobility to warmer climates in the southeast and southwest

– Simplification of lifestyles; “Less is More”

" Not as loyal to brands as same age group in decades past

– Baby Boomers are seeking:

" Streamlined financial services

" Smaller homes – yet multiple homes

" Alternative healthcare methods – reduction in medical benefits

" Part time jobs to supplement their income for retirement



• Immigrants make up 12% of “early boomers” (born 1946-55) and 15% of “late boomers” (1956-64)

• Control 70% of the total net worth of American households - $7 trillion of wealth

• Own 80% of all money in savings and loan associations

• Spend more money disproportionately to their numbers than any other age group

• Watch television more than any other age group

• Read newspapers more than any other age group

• Account for a dramatic 40% of total consumer demand


GENERATION X

• What Happened to Generation X?– Generation X is defined at those children born from 1963-1978 and is currently

age 28-42, the primary earning years.

– This segment is now turning “30” and “40”

– Sons and daughters of the women's liberation movement in the 1970s and grewup in day care centers and child care surrogate parents

– Are more conservative and more serious vs. the upcoming Generation Y marketsegment

– Yet – will ultimately inherit the baby boomers’ lifetime savings and investments


GENERATION X (cont.)

• Implications for the Generation X Market Segment in the US– More “diagnostic” research is needed to determine their values, product

preferences, psychographics, etc.

– The “mobility index” of this generation needs to be determined and tracked

– Brand preferences can be “polarized” as they are “sandwiched in” between theBaby Boomers and Generation Y in the US

– It is important to segment this age group rather than merge them in with theGeneration Y or Baby Boomers generation


GENERATION X (cont.)

• In 1970, 47% of Boomers between 18 and 24 lived with their parents

• In 1992, 54% of Xers between 18 and 24 lived with their parents. Anincrease of 15%.

• In 1975, the median age for first marriages among Boomers was 23.5 yearsfor men and 21.1 years for women.

• In 1992, the median age for first Xer marriages was 26.5 years for men and24.4 years for women.


GENERATION Y

• The Powerful Force of Generation Y– 1982 – 2002

– Sometimes known as the “Millennials”

– Are technologically literate and “connected” to the internet

– Have an extremely high degree of “global brand awareness”

– Are “indulged” by their parents

– Are less driven by “monetary goals” and have a moderate – high degree of awareness of social and environmental issues

– Have a “sense of adventure”

– “Know what they want, when they want it and how to get it”


GENERATION Y (cont.)

• Implications of The Powerful Force of Generation Y– Impact on the new design of products [everything from iPods, clothing,

cars they want to drive, retail stores they want to frequent, etc.]

– Less influenced by their parents than previous generations

– New product development and design research should be researchedat this age


GENERATION Y (cont.)

• 70.4 million youth, ages 5-22, composing approximately 26% of the US population.

• 75-98% of the teenagers have a computer at home, depending on HHI.– ~ 75-80% of have access to the Internet from home.

• Teenagers have an average of $100/month disposable income.

• 15% HS students have a co-signed credit card; 11pc have their own

• 30% of teenagers have checking accounts

• They feel “crunched” for time.


Some characteristicsof the generations

• Matures (prior to 1946)

– Dedicated to a job they take on– Respectful of authority– Place duty before pleasure

• Baby boomers (1946-1964)

– Live to work– Generally optimistic– Influence on policy & products

• Generation X (1965-1980)

– Work to live– Clear & consistent expectations– Value contributing to the whole

• Gen Y/Millennials (1981-1994)

– Live in the moment– Expect immediacy of technology– Earn money for immediate

consumption


HISPANIC CULTURE ANDMARKET SEGMENT

• The Growing Hispanic Culture and Market Segment– “Spanglish” is the third language of the US

– 35.3 million people, or 12.3% of the US population (2000), up 57.9% from 1990

– Projected to reach 59.8 million people by 2020 or 17.8% of the US population

– Compared to other immigrant cultures, the Spanish immigrant culture in the UStends to keep their language and culture

– Hispanics are increasing their financial wealth in the US and their political “clout”

– Market research needs to segment their preferences for new products, brandpreferences and lifestyles and values


HISPANIC CULTURE ANDMARKET SEGMENT (cont.)

• Implications of the Growing Hispanic Culture and Market Segment

– Hispanic consumers have distinct retail store and brand preferences

– Hispanic Generation X and Y are “vastly” different from Hispanic baby boomerswho migrated to the US

– The Hispanic market segment needs to be researched and analyzed vis-à-vis theCaucasian, African American, Asian segments, and other ethnic segments in theUS


CHANGING U.S. SHOPPINGPATTERNS

• The Rise of “Lifestyle Shopping Centers”

– In 2005, approximately 191 million shoppers shopped in malls each month in theUS, up from 181 million in 2004

– Women shoppers outnumber men shoppers 2:1 and men spend an average of10 minutes less per mall visit

– In 2005, shopping center “inclined sales” totaled $2.1 trillion, up from $2.0 trillionin 2004

– The trend: toward building outdoor shopping areas and adding lifestyle sectionsto existing enclosed malls

– The lure of entertainment, shopping, and food in an outdoor center


THE CHANGING US SHOPPINGPATTERNS (cont.)

• Changing US Retail Distribution Patterns

– Shoppers are now turning to shopping in “Town Centers” in the US

– “Town Centers” are open air malls vs. Regional Centers which are enclosed malls

– “Lifestyle Centers or Town Centers” are smaller [150,000 – 500,000 square feet] vs. [400,000-800,000square feet] than a regional center mall

– Town Centers offer upscale and national and local specialty stores ; dining and entertainment [e.g.Whole Foods, The GAP, Barnes and Noble, etc] vs. Regional Malls which offer fine line departmentstores, mass merchandisers, mainline specialty stores and food courts [e.b. Macy’s, Sears, etc.]

– Men and women, who are not big shoppers will come to town centers for dining and entertainment


THE CHANGING US SHOPPINGPATTERNS (cont.)

• The Future for Shopping in the US

– Typical malls, or “single use retail environments” will disappear as“economic hubs” grow to include residential and office buildings

– Retail and entertainment centers are the future

– This evolution will have an impact on today’s retailers


MARKET RESEARCH IMPLICATIONS

• Implications for US Market Research– Consumers need to be surveyed regarding their retail shopping

patterns and preferences

– Increased intercepts in a variety of malls and “open” towncenters to gain insights into representative consuming habits


On-going Environmental Scan

On-going Monthly Tracker

Indices A B C D

Statistical & Segmentation Analysis

Net Result:• Draw comparisons between segments• Draw comparisons between regions• Ability to analyze month to month comparisons

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Insights Into the Changing U.S. Consumer Market