Retail Merchants Association Economic Forecast Breakfast October 1, 2010 Five Things You Need To Know Scott Krugman, National Retail Federation

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About National Retail Federation NRF is the world’s largest retail trade association We are a global organization that includes retailers of all sizes, formats and channels We represent an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2009 sales of $2.3 trillion Two of our main objectives is to educate and advocate Source: NRF

© 2010, BIGresearch® Consumer Intentions & Actions: September 1.More are Spending More, Fewer are Spending Less on Gifts 2.Confidence in the Economy is Wilting 3.Unemployment Continues to Concern 4.Practicality Remains, but Paying with Plastic is OK 5.Temptation to Spend Exists, particularly with Electronics Disclaimer: BIGresearch® makes no warranties, either expressed or implied, concerning: data gathered or obtained by BIGresearch from any source; the present or future methodology employed in producing BIGresearch statistics; or the BIGresearch data and estimates represent only the opinion of BIGresearch and reliance thereon and use thereof shall be at the user’s own risk. BIGresearch® is a registered trademark of Prosper Business Development Corp. This report is derived from the following BIGresearch® Studies: BIGresearch® Consumer Intentions & Actions® Survey (CIA™), September 2010 (N = 9291, respondents surveyed 8/31 – 9/8/10) BIGresearch® Consumer Intentions & Actions® Survey Trends, September 2002 – September 2010 Five Facts You Need to Know About Consumers Headed into Holiday ‘10

© 2010, BIGresearch® #1: More are Spending More, Fewer are Spending Less on Gifts Based on your present situation and feelings toward the economy, which of the following best describes your plans for the December Holiday Season? Adults 18+ Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

© 2010, BIGresearch® #1: More are Spending More, Fewer are Spending Less on Gifts Based on your present situation and feelings toward the economy, which of the following best describes your plans for the December Holiday Season? Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 10 I plan to spend MORE.I plan to spend LESS.

© 2010, BIGresearch® #1: More are Spending More, Fewer are Spending Less on Gifts Retailers should experience jollier holiday season than 2008 and 2009 Consumer spending during fall 2010 increased slightly, showing signs for a positive gift giving season Influential factors Decorated stores & holiday spirit Customer service Discounts & sales Heavy advertisements Easy to navigate store layout

© 2010, BIGresearch® #2: Confidence in the Economy is Wilting Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT Confident/Very Confident in Chances for a Strong Economy Adults 18+

© 2010, BIGresearch® Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT Confident/Very Confident in Chances for a Strong Economy Adults 18+ #2: Confidence in the Economy is Wilting

© 2010, BIGresearch® #2: Confidence in the Economy is Wilting Consumer confidence is definitely lacking throughout the US Only 27.4% are very confident/confident in a strong economy To drive consumers into your store and/or purchase your product, your company will need: A product and/or service that is needed and wanted by the consumer Demonstrate the benefit to the consumer Positive statements regarding the company Excellent customer service to differentiate your company

© 2010, BIGresearch® #3: Unemployment Continues to Concern Regarding the U.S. employment environment, over the next 6 months, do you think that there will be more, the same or fewer layoffs than at present? Adults % Concerned with becoming laid off 4.0% Concerned with becoming laid off 12.9% Know someone who has been laid off 12.9% Know someone who has been laid off 9.6% U.S. Unemployment Rate 9.6% U.S. Unemployment Rate Source: U.S. Bureau of Labor Statistics Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT 07-10

© 2010, BIGresearch® #3: Unemployment Continues to Concern Despite high unemployment, concern of potential job loss has eased slightly Spending patterns are expected to increase Spending based on a sense of gratitude “I made it through the past several difficult years”

© 2010, BIGresearch® #4: Practicality Remains, but Paying with Plastic is OK In the last 6 months, have you made any of the following changes? Adults 18+ Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT Paying with Cash More Often Sept-10: 20.3% Sept-09: 22.6% Sept-08: 21.8% Sept-07: 18.8% Sept-06: 22.1%

© 2010, BIGresearch® #4: Practicality Remains, but Paying with Plastic is OK Practical spending patterns by consumers can be based on: Back to school purchases Saving for holiday purchases Little confidence in the economy A greater portion of holiday gift giving anticipated to be practical items As the holidays approach, expect credit card activity to increase

© 2010, BIGresearch® Category:Aug-10Sept-09Sept-08Sept-07Category:Aug-10Sept-09Sept-08Sept-07 Children’sdownupflatdownToys/Gamesup down Women’s DressdownupflatdownCDs/DVDs/Videos/Booksup down Women’s Casualflatup downElectronicsup down Men’s Dressflatup downGroceriesdownup down Men’s Casualflatup downHome Improvementdownup down Shoesdownup downLawn & Gardendownup down HBCdownup downHome Furnituredownup down Dining Outdownup downHome Décordownup down Sporting Goodsdownup downLinens/Bedding/Draperiesup down #5: Temptation to Spend Exists, particularly with Electronics Retail Merchandise Categories - 90 Day Outlook (Sept-10 compared to Aug-10, Sept-09, Sept-08, and Sept-07) Note: “Up,” Down,” “Flat” refers to the direction of the Diffusion Index compared to the previous month (Aug-10) or years (Sept-09, Sept-08, Sept-07). Diffusion Index = % Spending More - % Spending Less. Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT Over the next 90 days (September, October, and November), do you plan on spending more, the same or less on the following items than you would normally spend at this time of the year? Adults 18+

© 2010, BIGresearch® Source: BIGresearch®, Consumer Intentions & Actions® Survey, SEPT Do you plan to make any of the following major purchases within the next 6 months? Adults 18+ #5: Temptation to Spend Exists, particularly with Electronics

© 2010, BIGresearch® #5: Temptation to Spend Exists, particularly with Electronics Home for the holidays theme will resonate with consumers Celebrations for a brighter year bring high hopes tempered with practical expectations. Top gift items include: Electronics Toys Books Clothes

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