The overall U.S. economy is still strong. But many Americans, including people who have jobs, are still struggling financially.
As a recent report from the Hartman Group points out, the fact that large numbers of American consumers are living paycheck to paycheck inevitably affects how and where they shop.
The report — “The Business of Thrift 2018: Understanding Low-Income and Value-Oriented Consumers” — notes that more than half of U.S. consumers are considered low-income, according to federal standards. And low-income consumers’ approach to grocery shopping is focused on price and convenience.
That means more spending at dollar stores, discount grocers and Walmart, and less at grocery stores, warehouse clubs and natural/specialty stores. According to the report, low-income consumers say they make just 30% of their food and beverage purchases at grocery stores. Middle- and high-income consumers, by contrast, make 41% of their food and beverage purchases in that channel.
Low-income consumers make 28% of their grocery purchases in discount stores (compared to 20% for middle/high income consumers), and they buy 17% of their food and beverages at dollar stores (versus 8% for those with middle/high incomes).
Low-income consumers also tend to focus their purchasing on a narrower range of product categories, spending mostly on essentials and buying less from perimeter departments. While middle- and higher-income shoppers place a higher emphasis on product quality and nutrition, lower-income shoppers see themselves as sacrificing those qualities in order to get the lowest prices. And some of the ways that their more affluent peers shop are not relevant to them.
“Mid/high income shoppers seek savings through promotions, coupons and cooking at home,” the report’s executive summary notes. “Low-income shoppers typically already buy the lowest-priced items, making sales irrelevant. With tight budgets and limited storage space, they are often unable to take advantage of deals when they see them. They focus more than others on actually buying and using less food.”
The report argues that the shrinking middle class means that lower-income consumers make up a growing part of the consumer population. Finding ways to help these consumers live better represents a big opportunity — for retailers as well as for the consumers themselves.