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BLOOMINGDALES, TARGET AND LOWE’S LIKELY WINNERS THIS HOLIDAY SEASON ACCORDING TO NEW RETAIL SPENDING POTENTIAL INDEX

Echelon Report Identifies “Fattest Regional Wallets” for Holiday Shopping

MCLEAN, VA – November 16, 2006 – Bloomingdales, Target and Lowe’s are the retailers best positioned to clean up this holiday season because of their strong footprint in the nation’s top 10 metropolitan markets in terms of spending capacity. These markets have an estimated 44.3% of total U.S. retail spending potential even though approximately 29.8% of households reside within them.

“This information comes from Echelon Marketing’s new economic measure: the Retail Spending Potential Index™ (RSP Index™),” said Echelon Marketing President, Don Neal. “The RSP Index provides a leading indicator of consumer spending potential, which is far more relevant to the marketplace than current time-delayed measures that have limited real-time applicability.”

Echelon’s RSP Index is derived from multiple sources, including proprietary information on over $18 trillion in U.S. consumer assets. The Index represents average discretionary spending capacity per household within over 200 markets across the U.S. This ranking has the power to more accurately predict where retailers have the opportunity to do very well this holiday season.

Among the highlights in the current RSP Index:

• In the department store category, the index estimates that Bloomingdales will top Neiman Marcus, Lord & Taylor, Nordstrom and Macy’s in average available discretionary spending for the areas around its stores;
• Target customers have on average an estimated 10% more available spending capacity than Wal-Mart customers;
• New York and Los Angeles top the Index for estimated spending potential by market, but San Francisco is a surprising third with approximately 2 ½ times the amount of the average U.S. household.

Big Box versus Discount Super Stores. Discount Super Stores and Big Box/Electronics retailers will be competing head-to-head this holiday season due to their relatively equal access to available discretionary spending dollars. In the Big Box/Electronics category, Best Buy could outperform Circuit City with 24% more discretionary dollars available in its footprint. However, the typical consumer living near a Circuit City location has about 6% more in discretionary spending than consumers near Best Buy, which could result in less price-dropping pressure for Circuit City.

In the Discount Super Store category, Wal-Mart and Target are neck-and-neck in terms of total discretionary spending. Though their potential customers have more discretionary spending dollars on average than Wal-Mart customers, Kmart and Sears should not be as much of a threat this year since these stores do not have as many available consumers overall.

“Retailers across all merchandise categories realize that in order to effectively build their brand and promote the most appropriate merchandise mix, they need to understand a consumer’s spending potential,” said Neal. “Because of this, retailers are increasingly using empirical data and custom analyses to drive their decision-making. They realize that by leveraging market data in a sophisticated way they can identify customers more accurately based on their capacity to spend, affinity for a brand and propensity to make a purchase.”

Department Store Woes. Problems may persist for Department Stores this season, as they have access to only half as much available discretionary spending as Big Box and Discount Super Stores. Of the category, Bloomingdales should end up on top, as it outranks Neiman Marcus, Lord & Taylor, Nordstrom and Macy’s in average available discretionary spending for the areas around its stores. Macy’s could also fare well this season due to its large footprint in terms of household reach, and because overall it has 30% more spending in its areas than other Department Stores. However, consumers in areas surrounding Macy’s stores have an estimated 9% fewer discretionary dollars on average than consumers in proximity to the stores of its primary competitors.

The Usual Suspects. The top 10 markets, which contain an estimated 44% of total holiday retail spending potential this year, are:

“This ranking illustrates that marketers can focus the lion’s share of their resources on these markets and be assured of reaching the highest amount of spending potential,” said Neal. “But, if they want to be more strategic in their spend, they can focus more selectively using RSP Index data instead of just relying on overall household counts. For example, San Francisco ranks 5th in terms of market size but 3rd in the RSP Index. Similarly, Washington, D.C. ranks 8th in households and 5th in the RSP Index.”

Neal also encouraged retailers to “look beyond the usual suspects” to find spending potential. In particular, he noted that San Diego is the 25th largest market by number of households, but ranks 15th in spending potential. Other “surprises” that ranked in the top 120 markets in terms of size but in the top 100 markets for spending potential were Bakersfield, Santa Barbara and Monterey/Salinas, California; Reno, Nevada; and Eugene, Oregon.

Surprises in Retail Spending per Household. This year, the top 10 markets based on the average Echelon RSP Index by household are:

The metropolitan areas in the top five rankings all have double the spending potential of the average U.S. household. “Philadelphia (#29), Dallas (#27) and Atlanta (#25) don’t even crack the top 20 in terms of retail spending potential per household, even though they rank 4th, 7th and 9th respectively in terms of market size,” said Neal. “Marketers looking beyond the usual suspects here will find West Palm Beach’s lofty number 5 ranking (compared with a market size rank of 38), as well as other surprises like Providence, RI which ranks 51st in market size and 18th in spending potential by household.”

Neal concluded that there are a number of markets where the spending potential is significantly higher than their income would suggest, citing Bend and Medford, Oregon; Traverse City, Michigan; Billings, Montana; and Boise, Idaho. “Retailers may overlook the potential in some of these markets because their affluence and spending potential are under-represented by traditional measures.”

About Echelon Marketing
Echelon Marketing provides strategic marketing solutions built on proprietary economic data and customized analyses, enabling clients to achieve more accurate targeting, more compelling offers and a more powerful and personal brand connection: in a word, relevance. Echelon’s solutions are built on a platform of Econographic Data derived from over $18 trillion in consumer assets. This information helps provide the most accurate and predictive measure of a household’s discretionary spending capacity: Economic Insight.

Based in McLean, VA, Echelon Marketing is a division of IXI™ Corporation.

The material presented is based upon information that Echelon Marketing considers reliable, but Echelon Marketing does not represent that it is accurate and complete. No person should consider Echelon Marketing’s distribution of this material as making any representation or warranty with respect to such material and should not rely upon it as such. COPYRIGHT NOTICE. Copyright © 2006 Echelon Marketing, a division of IXI Corporation, 7927 Jones Branch Drive, Suite 400, McLean, VA 22102. U.S.A. All rights reserved. TRADEMARKS: Retail Spending Potential Index, RSP Index, and IXI are trademarks of IXI Corporation. All other trademarks mentioned herein are the property of their respective owners.