09.21.10
Even in a challenging and changing marketplace, lower-income shoppers will generate $115 billion in incremental spending during the next decade, according to research from SymphonyIRI Group. However, they are one of the most misunderstood, ethnically-diverse and underserved shopper segments in the U.S.
The “Lower-Income Shopper Report” is built on a 4-year history of shopper behavior across the following five lower-income/multicultural segments and examines what is important to each group and what it will take to be successful in serving their changing needs: Hispanic households, African American households, young households aged 25-34, older/senior households aged 65 and older and households with children.
Shopping and Spending Trends
Lower-income consumers frequently shop but generally spend less per trip than average, often shopping with only a paycheck or pocket cash. African American lower-income consumers make the most retail shopping trips per year with 177 trips, seniors make 169 and Hispanics make 168. Lower-income households with children spend the most at $39.65 per trip, followed by younger households at $37.58.
Although lower- and higher-income shoppers both report careful trip planning, more than half routinely make unplanned purchases while in the store. At the same time, 49% of lower-income shoppers are much more likely to track their spending during the trip and make budget driven decisions on the fly versus 38% of higher-income shoppers.
Economy
During the past two years, half of lower-income shoppers report that they have decreased spending in discretionary areas, including home furnishings and furniture, in order to better afford essentials, such as food and healthcare. For example, spending on clothing and shoes has decreased by 43%, while spending on food and beverages and healthcare products has increased by 31% and 27%, respectively.
In selecting individual products in the store, lower- and higher-income shoppers are heavily influenced by promotional pricing and products for which they have a coupon. Higher-income shoppers are more likely to be influenced by past usage, television and print advertising, and recommendations from friends.
Private Label
Lower-income shoppers across the board are turning to private label products to save money; however, there are some nuances regarding private label attitudes. For instance, 29% of older lower-income households think name brands are worth the extra price versus 46% of African Americans, who appear to the be the most brand loyal micro segment.
In addition, 64% of younger households and households with children are willing to sacrifice quality to get a better price on a product versus 51% of older households. And, 70% of households with children will switch to another brand if it’s cheaper versus 60% of African Americans.
Needs, Wants and Satisfaction
When selecting a grocery store, older shoppers are very focused on each component of the store’s value proposition as well as store brand quality and helpful employees. For instance, 96% of older lower-income shoppers look for stores that offer good value for the money compared to 87% of Hispanic households and 86% of younger households. Interestingly, younger shoppers score lower on all criteria in selecting a store except for ethnic/specialty food variety, with 61% needing variety versus 48% of older households.
Looking at satisfaction levels across all micro segments, older households show the highest levels of satisfaction on nearly every criterion, while younger households indicate consistently lower levels of satisfaction, indicating opportunities for retailers.
Health, Wellness and Lifestyle
Fitting the diverse nature of lower-income households, their lifestyles and attitudes toward health vary broadly. For example, 76% of older households say eating healthy is important versus 65% of younger households. On the opposite end of the spectrum, only 41% of older households say projecting a good image is important versus 64% of African Americans and 62% of households with children.
When shopping for specific products, better-for-you attributes are important to all micro segments but with important variations. Older households are primarily focused on whole grains/high fiber as well as weight management attributes, while Hispanics place a higher relative importance on natural foods, super foods and those enriched with protein.
“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, Symphony Consulting, SymphonyIRI Group, which has released its fourth annual research report, “The Lower-Income Shopper Report: Serving Lower-Income/Multicultural Shopper Micro-Segments.”
“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,” Mr. Seitzinger continued.
Lower-Income Micro Segments
Lower-Income Micro Segments
The “Lower-Income Shopper Report” is built on a 4-year history of shopper behavior across the following five lower-income/multicultural segments and examines what is important to each group and what it will take to be successful in serving their changing needs: Hispanic households, African American households, young households aged 25-34, older/senior households aged 65 and older and households with children.
Shopping and Spending Trends
Lower-income consumers frequently shop but generally spend less per trip than average, often shopping with only a paycheck or pocket cash. African American lower-income consumers make the most retail shopping trips per year with 177 trips, seniors make 169 and Hispanics make 168. Lower-income households with children spend the most at $39.65 per trip, followed by younger households at $37.58.
Although lower- and higher-income shoppers both report careful trip planning, more than half routinely make unplanned purchases while in the store. At the same time, 49% of lower-income shoppers are much more likely to track their spending during the trip and make budget driven decisions on the fly versus 38% of higher-income shoppers.
Economy
During the past two years, half of lower-income shoppers report that they have decreased spending in discretionary areas, including home furnishings and furniture, in order to better afford essentials, such as food and healthcare. For example, spending on clothing and shoes has decreased by 43%, while spending on food and beverages and healthcare products has increased by 31% and 27%, respectively.
In selecting individual products in the store, lower- and higher-income shoppers are heavily influenced by promotional pricing and products for which they have a coupon. Higher-income shoppers are more likely to be influenced by past usage, television and print advertising, and recommendations from friends.
Private Label
Lower-income shoppers across the board are turning to private label products to save money; however, there are some nuances regarding private label attitudes. For instance, 29% of older lower-income households think name brands are worth the extra price versus 46% of African Americans, who appear to the be the most brand loyal micro segment.
In addition, 64% of younger households and households with children are willing to sacrifice quality to get a better price on a product versus 51% of older households. And, 70% of households with children will switch to another brand if it’s cheaper versus 60% of African Americans.
Needs, Wants and Satisfaction
When selecting a grocery store, older shoppers are very focused on each component of the store’s value proposition as well as store brand quality and helpful employees. For instance, 96% of older lower-income shoppers look for stores that offer good value for the money compared to 87% of Hispanic households and 86% of younger households. Interestingly, younger shoppers score lower on all criteria in selecting a store except for ethnic/specialty food variety, with 61% needing variety versus 48% of older households.
Looking at satisfaction levels across all micro segments, older households show the highest levels of satisfaction on nearly every criterion, while younger households indicate consistently lower levels of satisfaction, indicating opportunities for retailers.
Health, Wellness and Lifestyle
Fitting the diverse nature of lower-income households, their lifestyles and attitudes toward health vary broadly. For example, 76% of older households say eating healthy is important versus 65% of younger households. On the opposite end of the spectrum, only 41% of older households say projecting a good image is important versus 64% of African Americans and 62% of households with children.
When shopping for specific products, better-for-you attributes are important to all micro segments but with important variations. Older households are primarily focused on whole grains/high fiber as well as weight management attributes, while Hispanics place a higher relative importance on natural foods, super foods and those enriched with protein.
