"Lower-income households are one of the hottest opportunities in the marketplace and will provide real growth for those who want to truly learn [image-nocss] about the various micro-segments and their changing behaviors due to the economy," said IRI Consulting & Innovation president Thom Blischok. "At this point in history, the lower-income shopper is continuously challenged to stretch each and every one of their dollars, which will continue for at least the next four-to-eight years."
"The Lower-Income II Report: Serving Budget-Constrained Shoppers in a Recessionary Environment" uncovers the critical differences and recessionary spending patterns and behaviors of lower-income micro-segments that are driving today's CPG growth. The report identifies five key lower-income micro-segments that will be responsible for many growth opportunities and uncovers huge variations in shopping frequency and spending levels as well as channel and category-level dynamics.
The five lower-income micro-segments, which are positioned to drive a large share of sales growth for retailers and manufacturers during the challenging economy, include:
Singles and married couples aged 25-34. Seniors older than 65. Households with children. Hispanics. African Americans. During third-quarter 2008, consumer packaged goods (CPG) spending and private-label performance has improved, which is a trend being led by lower-income shoppers; however, most retailers are still missing the mark on their private-label offerings and marketing to lower-income shoppers, who represent the single largest private-label opportunity in the next five years. Progressive retailers can drive private-label growth if they focus on building stronger relationships with lower-income shoppers by improving variety and packaging.
Compared with other income groups in today's economy, budget-constrained, lower-income shoppers are shopping more frequently, but are spending less per trip. They are also aggressively shifting spending across channels, retailers, categories and brands.
In addition, younger households and households with kids are driving growth across key food categories. African American and older household spending has increased notably in salty snacks and chocolate candy, and Hispanics have increased their spending on frozen dinners and cereals.
Retailers can make the most out of their own unique opportunities by working with the following four-phase process designed to help retailers: Value the size of the business opportunity and investment implications. Use lower-income household segmentation as a means to differentiate from competitors. Understand lower-income spending nuances and proactively adjust store offerings. Validate the required steps towards success and execute and drive the process. "The Lower-Income Shopper Report: Learning to Better Serve Lower-Income Shoppers" is a culmination of research that includes a four-year analysis of shopping behavior across five lower-income segments and an exclusive IRI AttitudeLink survey of shoppers, in-depth case studies and secondary research to develop an understanding of the marketplace and factors impacting lower-income households.Click here for more information about the report and to view the executive summary.
Chicago-based IRI is a leading provider of consumer, shopper, and retail market intelligence and insights supporting CPG, retail and healthcare companies.
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