Nielsen Study Finds Selective Affluent Shoppers Enjoy Value, Variety
- Fresh Foods A Big Draw; Quality Counts
- Club Stores, Alternative Formats Popular Options
15 February 2007, Schaumburg, IL, 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. According to a study just released by The Nielsen Company, households with $100,000+ annual incomes patronize club stores like Costco and Sam’s Club and upscale mass merchandisers like 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 alcoholic beverage aisle.
“Affluent shopper DNA is all about product quality and variety, with value as an added bonus,” said Todd Hale, Senior Vice President, 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% 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 trends toward larger white families with a household head working in a white collar job, where the female head of household is between the ages of 35 and 54, whose income is in excess of $100,000 per year and resides in one of 17 major Nielsen markets. According to U.S. Census estimates, affluent families now comprise 17% of U.S. households and are projected to escalate, reaching 22% 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 who earn $20,000 or less. Conversely, lower income households [<$20,000 per year] are 74% more likely to shop at dollar stores, 42% more likely to patronize a convenience/gas store, and 21% more likely to frequent a supercenter.
Hale noted 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, pet and liquor stores.
“‘If you can’t beat them, join them’, sums up a notable twist on the promotions front,” Hale said. “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, $46 more than a lower income household. The same high-spending trends holds for other formats as well: the affluent family register ring on a typical grocery trip is $47, on a mass merchandiser trip it’s $56, and in both cases, 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: large size club packs, higher-end merchandise assortment, as well as an aggressive promotional playbook that includes in-store flyers, magazines, e-mail, live demonstrations and food/beverage sampling stations.
Affluent shoppers are wired to consume, visiting 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 BusinessWeek, 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.”
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), business publications (Billboard, The Hollywood Reporter, Adweek), trade shows, and the newspaper sector (Scarborough Research). The privately held company has more than 42,000 employees and is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA.
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