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Lower-Income Shoppers See Private Label as a Money Saver

September 27, 2010
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Younger lower-income shoppers are more likely to switch brands based on price than are older lower-income shoppers. This is one of several nuances revealed in a new SymphonyIRI study that confirms lower-income shoppers turn to private label products to save money.
 

For instance, 29 percent of older lower-income households think name brands are worth the extra price versus 46 percent of African Americans, who appear to the be the most brand-loyal micro segment.

In addition, 64 percent of younger households and households with children are willing to sacrifice quality to get a better price on a product versus 51 percent of older households. And, 70 percent of households with children will switch to another brand if it’s cheaper.
 
Lower-income shoppers will generate $115 billion in incremental spending during the next decade, says SymphonyIRI. However, they are one of the most misunderstood, ethnically-diverse and underserved shopper segments in the United States.
 
To help rectify the situation, Chicago-based SymphonyIRI Group just 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.” says Sean Seitzinger, partner, Symphony Consulting, SymphonyIRI Group.

The report is built on a four-year history of shopper behavior across five lower-income/multicultural segments: Hispanic households, African American households, young households aged 25-34, older/senior households aged 65 and older, and households with children.

Lower-income consumers frequently shop but generally spend less per trip than average. 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.

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 percent, while spending on food and beverages and healthcare products has increased by 31 percent and 27 percent, 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.

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 percent of older lower-income shoppers look for stores that offer good value for the money compared to 87 percent of Hispanic households and 86 percent of younger households. Interestingly, younger shoppers score lower on all criteria in selecting a store except for ethnic/specialty food variety, with 61 percent needing variety versus 48 percent 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. 

“The Lower-Income/Multicultural Shopper Report: Serving Lower-Income Shopper Micro-Segments” is a culmination of research that includes a survey of shoppers and proprietary consumer data. For more information, visit http://www.SymphonyIRI.com.

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