CHICAGO — While lower-income shoppers have decreased spending in discretionary areas during the past two years, 31% of these consumers have increased what they spend on food and beverages, according to a report on lower-income shoppers by SymphonyIRI.
According to SymphonyIRI’s “The Lower-Income Shopper Report: Serving Lower-Income/Multicultural Shopper Micro-Segments,” this market represents $115 billion in incremental spending during the next decade. During the past two years, 43% of this group has decreased spending on clothes and shoes while increasing spending on foods and beverages. The increase was the result of food price inflation and eating out less in restaurants.
“Many retailers and manufacturers take a one-size-fits-all approach to reaching lower-income shoppers, but with a $115 billion opportunity at stake and increasing competition to win their share of wallet, a mass market view of these shoppers will not be enough to win their loyalty,” said Sean Seitzinger, partner with Symphony Consulting, SymphonyIRI Group. “Only those retailers and manufacturers that embrace a micro-segmentation strategy to truly understand the needs and wants of these varied, nuanced and multicultural shopper groups will be able to serve them effectively and profitably.”
African American lower-income consumers make the most shopping trips per year followed by seniors and Hispanics. While lower-income shoppers are careful to plan their shopping trips, more than half routinely make unplanned purchases in the store, but 49% of these consumers are much more likely to track their spending during the trip and make budget-driven impulsive decisions compared with 38% of higher-income consumers.
While lower-income consumers are in general turning to private label products to save money, 29% of older lower-income households think name brands are worth the extra price compared with 46% of African Americans.
Also, 64% of younger households and households with children will sacrifice quality to get a better price compared with 51% of older households. Seventy per cent of households with children will switch to another brand if it’s cheaper compared with 60% of African Americans.
Older shoppers are also more focused on each component of the store’s value proposition as well as store brand quality and helpful employees. Specifically, 96% of older lower-income shoppers look for stores with good value for the money compared with 87% of Hispanic households and 86% of younger households.
Older households also ranked higher in saying eating healthy is important compared with younger households.