Time to Court Lower-Income Shoppers

Middle- and higher-income shoppers may represent a bigger pie to pursue, but retailers that develop micro-segmentation strategies to court lower-income shoppers will capture a share of their $115 billion incremental spend over the next decade, suggests new SymphonyIRI Group research called The Lower-Income Shopper Report.

Middle- and higher-income shoppers may represent a bigger pie to pursue, but retailers that develop micro-segmentation strategies to court lower-income shoppers will capture a share of their $115 billion incremental spend over the next decade, suggests new SymphonyIRI Group research called The Lower-Income Shopper Report.

Retailers can’t ignore these shoppers – not with comp sales hard to build and with people in every income tier looking to save, and with food prices anticipated to rise, observes The Lempert Report. To succeed with them requires a firm grasp of the behavioral and attitudinal differences across five groups:  Hispanic households, African-American households, young households age 25-34, older/senior households age 65 and older, and households with children.

First, a couple of general points from the report:

• More than half of shoppers overall make unplanned purchases during store visits, but 49% of lower-income shoppers are likelier to track spending during the trip and resist on the fly vs. 38% of higher-income shoppers.
• Over the past two years, half of lower-income shoppers said they cut discretionary spending to be able to afford food-beverages and healthcare. For instance, the clothing/shoes spend fell 43% while purchases of the latter items rose 31% and 27%.

“Many retailers and manufacturers take a one-size-fits-all approach to reaching lower-income shoppers, but…a mass market view of these shoppers will not be enough to win their loyalty,” notes Sean Seitzinger, partner, Symphony Consulting, SymphonyIRI Group. 

Here are some distinctions among the lower-income segments:

• Three in 10 older shoppers (29%) think name brands are worth the extra price over private label vs. 46% of African-Americans who believe this. Also, 70% of households with children will brand switch to save money vs. 60% of African-Americans.
• “Good value for the money” is a key determinant in where 96% of older shoppers shop vs. 87% of Hispanic households and 86% of younger households.  Ethnic/specialty food variety matters to 61% of younger shoppers vs. 48% of older households.
• Their approach to health also varies. Eating healthy is key to 76% of older households vs. 65% of younger households. Better-for-you food attributes matter to all, but older households focus primarily on whole grains/high fiber and weight management vs. Hispanics who skew toward natural foods, super foods and protein-enriched foods.

Retailers could feast on this low-hanging fruit by applying direct strategies to draw in the lower-income shoppers they know are in their stores.