400 W. Wilson Bridge Road, Suite 200, Worthington, OH, 43085 614-846-0146 info@BIGinsight.com

PAM E L A G O O D F E L L O W

C O N S U M E R I N S I G H T S D I R E C T O R , B I G I N S I G H T ™

G U E S T C O N T R I B U TO R :

J O H N M AR I O T T I , P R E S I D E N T & C E O , T H E E N T E R P R I S E G R O U P

The BIG Call

June 2012

© 2012, Prosper®

John Mariotti, President/CEO & Founder of

The Enterprise Group

• Director on corporate boards including:

• World Kitchen, LLC

• MCM Equity Partners

• Previously:

• President of Rubbermaid Office Products Group

• President of Huffy Bicycles

• Chairman of World Kitchen

• Award-winning author

• Written nine business books

• Writing & publishing THE ENTERPRISE, a weekly newsletter & blog, since 2001

• A ProsperNow blogger on FORBES

• A regular contributor to American Express Open Forum blog

• Articles and interviews about his business successes have appeared in The Wall Street

Journal, Fortune, Business Week and many more publications

• Guest on CNBC's Today's Business and Power Lunch shows and a panelist on

MSNBC’S Your Business

© 2012, Prosper®

June 2012 Consumer Survey

Disclaimer: BIGinsight™ is a trademark of Prosper Business Development Corp. Services are delivered by Prosper and/or a Prosper affiliated company (“Prosper”).

Prosper makes no warranties, either expressed or implied, concerning: data gathered or obtained from any source; the present or future methodology employed in

producing the statistics; or the data and estimates represent only the opinion of Prosper and reliance thereon and use thereof shall be at the user’s own risk.

This report is derived from the following studies:

• BIGinsight™ Monthly Consumer Survey, June 2012 (N = 8760, respondents surveyed 6/5 – 6/12/12)

• BIGinsight™ Monthly Consumer Survey Trends, June 2007 – June 2012

June 2012 Results

• Consumer Confidence

• Employment Outlook

• Practical Purchasing

• Financial Forecast

• 90 Day Outlook: Future Purchase Plans

• How is JC Penney’s “Fair & Square” Faring?

© 2012, Prosper®

Confident/Very Confident in Chances for a Strong Economy Adults 18+

Consumer Confidence

Source: BIGinsight™ Monthly Consumer Survey, JUN 11-12

Highlights:

• Confidence in the economy is

cooling off as summer heats

up…

Down a point from April

Second consecutive month of

decline

• Relatively more optimistic

compared to Jun-11 and Jun-10

27.8%

32.4%

31.3%

15%

20%

25%

30%

35%

40%

© 2012, Prosper®

Confident/Very Confident in Chances for a Strong Economy Adults 18+

Consumer Confidence

Source: BIGinsight™ Monthly Consumer Survey, JUN 07-12

27.8%

32.4%

31.3%

15%

20%

25%

30%

35%

40%

43.9

%

18.8

%

30.2

%

30.2

%

27.8

%

32.4

%

31.3

%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 May-12 Jun-12

28%+

decline

from

Jun-07

© 2012, Prosper®

Consumer Confidence

Virtually NO change over past 4 years—Few Reasons to be

Confident:

—High US Debt & Huge Deficits = Bad News for Future

—Loss of Home Equity/Value = Feel Poorer

—Slow, Sporadic Growth in Economy = Fewer New Jobs

—More Americans Unemployed, Longer

Government Leaders—CAN’T, WON’T… or DON’T… Fix This

AMERICANS EXPECT WHAT? MORE OF THE SAME! SEE?

© 2012, Prosper®

Employment Outlook

Source: BIGinsight™ Monthly Consumer Survey, JUN 10-12

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 18+

* U.S. Unemployment Rate for the previous month for each corresponding MMM-YY, as reported by the U.S. Bureau of Labor Statistics.

U.S

. U

ne

mp

loym

en

t R

ate

*

La

yo

ff P

red

icti

on

s

Highlights:

• One in four expecting “more”

layoffs over the next six months

Up nearly four points from a

month ago

• Fewer than one in five calling

for “fewer” layoffs

• Optimism fails to appear even

as Unemployment Rate

declines

Unemployment Rate has

declined 15% from Jun-10

Expecting “more” has only

decreased 5% within same time

period

• Employment mantra = more of

the “same.”

28.6% 28.1% 23.3% 27.0%

52.2% 54.6% 55.5%

56.3%

19.2% 17.4% 21.3% 16.6%

7.0%

7.5%

8.0%

8.5%

9.0%

9.5%

10.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jun-10 Jun-11 May-12 Jun-12

More Same Fewer U.S. Unemployment Rate*

9.6%*

9.0%

8.1%

8.2%

© 2012, Prosper®

Employment Outlook

FUD Part I: Fear Uncertainty & Doubt … CONTINUE

—Higher Productivity = More Competitive

—Fewer People Do More Work = Fewer Jobs

—Supply of Workers >> Demand for Employees (4:1)

—High Tech/High Skill Jobs go Unfilled, (or in Wrong Locations)

—Low Tech/Low Skill Jobs More Numerous (and Low Pay)

Creates Downward Pressure on All Wages (Impact on Spending?)

© 2012, Prosper® Source: BIGinsight™ Monthly Consumer Survey, JUN 11-12

Practical Purchasing

In the last 6 months, have you made any of the following changes? Adults 18+

Highlights:

• Last month’s “dip” in

practicality appears to have

been a “blip”

Nearly half pragmatic in

spending (48.2%)

On par with Jun-11,

though elevated from

previous years

• 54.7% are focused on

necessities

Consistent with June

figures recorded during

and after the recession

48.5% 48.2%

55.2%

54.7%

35%

40%

45%

50%

55%

60%

I have become more practical and realistic in my purchases

I focus more on what I NEED rather than what I WANT

© 2012, Prosper®

Practical Purchasing

FUD Part II Fear, Uncertainty & Doubt = “Paralysis”

When $$$$ Are Scarce,

—Needs Dominate Over Wants

—Shop for Value/Bargains, Low Cost Brands & Items

Summer Doldrums Don’t Help:

—Frugal Vacations Consume Spending,

—Summer jobs are scarce, activities cost $$

—$3.50/ Gal. Gas Still Means a $40-50 Fill-Up

Back to School Needs are Coming—Bargain Hunting Time

What Else to Do???

© 2012, Prosper® Source: BIGinsight™ Monthly Consumer Survey, JUN 11-12

Financial Forecast

Which of the following financial steps are you planning to take in the next 3 months? Adults 18+

Highlights:

• Cutting Spending and Debt

remain fiscal priorities

Decreasing overall spending =

32.8%

Paying down debt = 32.6%

Both plans on the rise from Jun-

11

• Increasing savings holds

relatively steady

0% 5% 10% 15% 20% 25% 30% 35% 40%

Decrease overall spending

Pay down debt

Increase savings

Pay with cash more often

Jun-11 May-12 Jun-12

© 2012, Prosper®

Financial Forecast

Consumers Are Stretched to the Breaking Point

Short of $$ to Spend (Discretionary spending even worse)

Want to Pay Down Debt, but Limited $$ to Do So

Wish They Could Save, but Limited $$ to Do So

Need to Just “Get By” and “Make Ends Meet”

So Look What Happens to Savings…

© 2012, Prosper® Source: BIGinsight™ Monthly Consumer Survey, JUN 07-12

Savings Summary

How much of your annual income do you estimate you saved in the last 12 months (including

any money saved towards retirement, education, liquid savings, etc.)? Adults 18+

Highlights:

• More than one-third (33.9%) is not

saving any income at all

On the decline since peaking in

Jun-10 (38.2%), has yet to

recede to Jun-07 level (29.3%)

• Those saving between 1% and

10% slowly declining since Jun-07

• Nearly one in five are saving 11%

to 20%, nearing pre-recession level

• Balance are saving 21% to 50%

(6.2%) or more than 50% (2.0%) of

their incomes

Though small, these figures

have both increased slightly

since Jun-07

10%

15%

20%

25%

30%

35%

40%

45%

Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12

0% 1 to 10% 11 to 20%

© 2012, Prosper®

Savings Summary

After “FUD” Wears Down Americans…

…The “Stockholm Syndrome” Grabs Them!

(This terms comes from when people held hostage begin to

accept and feel better about their captors.)

When Things Have Been Bad (or Not Good) for So Long, Even a

Small Change/Improvement Starts to Look Good

Example: When job growth is below 125,000 per month, a

month or two above 125,000 looks good, but 150,000 new

jobs/month are needed to just absorb new workforce entrants,

which doesn’t really help unemployment—it just hasn’t gotten

any worse.

BUT—Reality “Bites”—Shows the Improvements Were “Illusory”

Take a Look….

© 2012, Prosper®

Category: May-12 Jun-11 Jun-10 Category: May-12 Jun-11 Jun-10

Children’s down up up Toys/Games down up up

Women’s Dress down up up CDs/DVDs/Videos/Books up up up

Women’s Casual down up up Electronics flat up up

Men’s Dress down up up Groceries up up up

Men’s Casual down up up Home Improvement flat up up

Shoes flat up up Lawn & Garden down up up

HBC down up up Home Furniture down up up

Dining Out down up up Home Décor down up up

Sporting Goods down up up Linens/Bedding/Draperies down up up

Retail Merchandise Categories - 90 Day Outlook (Jun-12 compared to May-12, Jun-11, and Jun-10)

Note: “Up,” Down,” “Flat” refers to the direction of the Diffusion Index compared to the previous month (May-12) or years (Jun-11, Jun-10). Diffusion Index = %

Spending More - % Spending Less.

BIG Forward Look: 90 Day Spending

Source: BIGinsight™ Monthly Consumer Survey, JUN 10-12

Over the next 90 days (June, July and August), 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+

© 2012, Prosper®

BIG Forward Look: 90 Day Spending

Spending Plans are UP —YOY (Year over prior Year)

Spending Plans are DOWN — MOM (Month over prior Month)

Consumers’ Psyche Damaged by Continued FUD, Little Progress

HOPE & CHANGE (Americans promised & waiting for it…)

Became:

HOPE-LESS AND UN-CHANGED (From 2009-2012)

HOW WOULD YOU—HOW DO YOU—FEEL???

NEVER FEAR—THE HOLIDAY SEASON IS JUST 4-5 MONTHS

AWAY (As are the Nov. Elections!)

EXPECT: CONSUMERS ECONOMIZE NOW TO SPEND THEN

© 2012, Prosper® Source: BIGinsight™ Monthly Consumer Survey, JUN 11-12

How is JC Penney’s “Fair & Square” Faring?

Women’s Clothing – Shop Most Often Adults 18+

Highlights:

• Traditionally #3 in Women’s

Clothing, since the launch of

“Fair & Square,” JC Penney has

fallen to #4, behind Macy’s

• For more, click over to the

BIG Consumer Blog

Includes 10 year trends for

Top 5 Women’s Clothing

retailers (Walmart, Kohl’s,

Macy’s, JC Penney, Target)

“Hot or Not?” trended

graphic for JCP “Fair &

Square” (Mar-12 vs. Jun-12) 4%

5%

6%

7%

8%

9%

10%

11%

JC Penney Macy's

"Fair & Square"

Commences

NEW Blog

“Fair & Square” Revisited

© 2012, Prosper®

How is JC Penney’s “Fair & Square” Faring?

CHANGE IS HARD, and THE TRANSITION IS BRUTAL (PAINFUL)

Consumer Habits—Buying ON SALE (Built over years) = Hard To

Change (As shown in many past BIG Calls)

—EDLP—Tried and Failed by Other Retailers (Sears, Kmart, etc.)

—Couldn’t generate enough traffic/sales to Span the Dip in revenue.

—Internet pricing transparency adds pressure to EDLP

—MACY’S “sizzle”—head start: Celebrity/Brands + “SALES”

WALL STREET IS NOT PATIENT WITH TRANSITIONS (EPS drop)

(But patient, persistence is necessary…)

WHAT NOW? WE’LL SEE: MAYBE…

Less Complexity (“Clean House”) Shed “Old JCP” Image

Intensify Focus, Change Mix & Presentation even Faster

Create More “Sizzle”—Increase Traffic—Reason to Shop

BUT Still—Big Change IS Risky!

© 2012, Prosper®

BIG

Co

ns

um

er

Blo

g

Talking to Text: Harmless or Hindering to Drivers? view

Mommy Blog: Summertime Fun view

A Dog’s Life is for the Birds: “Low Price” Isn’t Key When

Buying Food for these Family Members view

Graduation 2012: Paper or Plastic? view

Three Wishes: A Remodeling Fairytale view

Mobile Users Speak…to Their Devices! view

“Fair & Square” Revisited view

The Father’s Day / Mother’s Day Spending Gap

Explained [?] view

Pain at the Pump Blog Series view

Generation Gap: Are School Standards Sinking? view

© 2012, Prosper®

Co

nta

ct

400 W. Wilson Bridge Road

Suite 200

Worthington, OH 43085

Ph: 614-846-0146

info@BIGinsight.com

for complimentary insights, visit:

www.BIGinsight.com

For more about John Mariotti:

http://www.mariotti.net/ _

and _

“Telling It Like It Is” Blog