INDEPENDENT RETAILER magazine is now the official news outlet for Wholesale Central visitors.
Each monthly issue is packed with new product ideas, supplier profiles, retailing news, and
business strategies to help you succeed.
See new articles daily online at IndependentRetailer.com.
Apr 1, 2007
The study by the Nielsen Company found that affluent shoppers enjoy value and variety. While affluent consumers appreciate a good value just like lower income shoppers, they can afford to be more selective about product quality, variety, fresh foods and store choice.
Households with $100,000 or more in annual income patronize club stores, such as Costco and Sam's Club, and upscale mass merchandisers, such as Target, in search of a deal, as well as national and higher-end grocery chains that meet their need for fresh produce, meat, poultry and seafood, along with a great deli section and an alcoholic beverage aisle.
"Affluent shopper DNA is all about product quality and variety, with value as an added bonus," says Todd Hale, senior vice president of Consumer & Shopper Insights for Nielsen Homescan & Spectra, an operating unit of The Nielsen Company. "Strong fresh food sections act like a magnet for affluent shoppers who make 56 percent more trips to purchase fresh produce, but the quality and selection have got to be there."
Analysts for Nielsen found that the typical affluent household with an annual income in excess of $100,000 trends toward larger white families with a household head working in a white collar job. The female head of household is typically between the ages of 35 and 54. And the family resides in one of 17 major Nielsen markets. According to U.S. Census estimates, affluent families now comprise 17 percent of all U.S. households and are projected to escalate, reaching 22 percent of all by 2010.
While the affluent shop all the mainstream retail channels, they are more than twice as likely to patronize a warehouse club store, and nine percent more likely to frequent a mass merchandiser when compared with households that earn $20,000 or less a year. Conversely, lower income households, those at the $20,000 a year level, are 74 percent more likely to shop at dollar stores, 42 percent more likely to patronize a convenience/gas store, and 21 percent more likely to frequent a super center.
Hale notes that there were, "No surprises about format preferences, which almost perfectly reflect retailer merchandising and targeting strategies." Favorite store banners among the affluent include national grocery chains, such as Kroger and Safeway; mass merchandisers like Target and Wal-Mart, and niche formats like Whole Foods. Less affluent consumers prefer retailers such as Save-A-Lot, Aldi and Kmart.
Alternative retail channels enjoy marked popularity among affluent shoppers in search of a knowledgeable sales staff, wide product selection and competitive prices. Higher income shoppers flocked to department and office supply stores, electronics outlets, news/bookstores, hardware/home improvement centers, and pet and liquor stores.
"'If you can't beat them, join them', sums up a notable twist on the promotions front," Hale says. "Grocers interested in retaining their affluent customer base have added a somewhat counterintuitive strategy to their promotion portfolio. These innovative grocers now sell gift cards or participate in joint promotions with alternative channels in an attempt to direct shoppers to competitors with the least amount of assortment overlap."
Wealthy shoppers have more to spend and willingly do so. The typical affluent warehouse club shopper spends $111 per trip, which represents $46 more than a lower income household. The same high spending trends hold for other formats as well.
The affluent family's register ring on a typical grocery trip is $47. On a mass merchandiser trip, it's $56, and in both cases it represents $18 more per trip than a low-income household.
The big basket size associated with warehouse club stores can be attributed to a number of factors. Among them are large size club packs and a higher-end merchandise assortment, as well as an aggressive promotional playbook that includes in store flyers, magazines, email, live demonstrations and food/beverage sampling stations.
Affluent shoppers are wired to consume, the study found. They visit CNN, ESPN, The Weather Channel, Google and AOL websites on a regular basis.
Cable TV is another medium favored by the wealthy who are regular viewers of The Golf Channel, BBC America, CNN Headline News, CNBC and ESPN. They also tune in to classical radio, news/talk programming, sports shows, jazz and alternative/modern rock offerings. Avid readers, their subscriptions include Business Week, Money, Golf, Newsweek and Consumer Reports magazines.
Hale believes, "A real opportunity exists for retailers to extend their traditional thinking about media to include the internet, developing more interactive programming, more tailored specials and more engaging content that can differentiate their stores and sustain a dialogue with their customers."
Topic: Business Strategies
Entire contents ©2021, Sumner Communications, Inc. (203) 748-2050. All rights reserved. No part of this service may be reproduced in any form without the express written permission of Sumner Communications, Inc. except that an individual may download and/or forward articles via e-mail to a reasonable number of recipients for personal, non-commercial purposes.