Think Consumer: Green Living
THINK SUMMARY:We recently surveyed over 100 consumers, 65 of which come from householdsearning over $175,000 per year. Of those high income households, over 70%have been cutting back on spending within the past few weeks. We outlinebelow the affected categories and the companies which we believe will beaffected. We fear that there are a number of companies that had previouslybeen immune to economic woes, due to their high income consumer base, thatare now going to be affected as fears surrounding the credit crisis spread to alllevels of the economy, though it seems that companies with a health andwellness focus may be less affected.
KEY POINTS:We believe that the below results signify that all categories of the consumereconomy are suffering, though some worse than others. Based on theseresults, we believe that there continues to be strong trends toward health andwellness in the country and that consumers will be less likely to cut back onproducts and services that promote their own well being.
In our survey of over 100 consumers, we decided to focus on the 65respondents whose household income is over $175,000 per year. (54 of the 65have household income of over $250,000.) See the following page for data...
Current Spending
Of the 65 surveyed consumers, 74% are cutting back on current spending; andof those cutting back...• 75% are dining out less at night, while 25% are dining out less during workhours. A company like Chipotle (CMG) could suffer from both.• 48% are spending less on play-related clothing, while 38% are spendingless on work-related clothing. Companies that sell clothing used in people'sspare time, such as lululemon (LULU) and Under Armour (UA), could be hitby this cutback from the high income customer.• 40% have cut back on Starbucks coffee (SBUX).• 23% are cutting back on groceries, which we believe hurts Whole Foods(WFMI) as its stores are percetved to have higher prices.
Least Cutbacks
• Only 13% have cut back on spending within the gym, which bodes wellfor Life Time Fitness (LTM).• Only 10% have cut back on healthier food purchases, a good sign for bothHain Celestial (HAIN) and Smart Balance (SMBL), which both sell products ina wide range of distribution channels.• Only 6% have cut back on personal care purchases, including makeup,which could also be a good sign for HAIN as well as makeup producer BareEscentuals (BARE), though we do not know how many respondents weremen and, thus, not using makeup to begin with.
Future Spending
Of the 65 surveyed consumers, 71% plan to cut back on future spending; andof those cutting back...• Only one respondent has new plans to cut back on gym membership, asignificant positive for Life Time Fitness (LTM).• 76% plan to curb spending on vacation travel.
