It turns out, most Americans are “low-income” consumers these days — including people we used to think of as “middle-class.” And you can blame the long-term effects of the Great Recession.
That’s according to a new Hartman Group report, “The Business of Thrift: Understanding Low-Income and Value-Oriented Consumers.”
“Growing income inequality — a long-term trend exacerbated by the Great Recession — means a higher share of consumers are now low income than in the past,” the report says. “Federal definitions of ‘low income’ actually cover the majority of American consumers and include consumers one might otherwise consider ‘middle class’ — those making around or just under 400 percent of the poverty level.”
The report details that a large number of consumers find it hard to afford everyday expenses, including food and beverages. So any confectionery companies that assume they could somehow ignore this demographic are likely wrong.
But what does this look like in practice for shoppers?
Well, they tend to stick to stores where they know the prices will be lower — and they often don’t have the time or the energy to bargain-hunt beyond that.
“They rely heavily on Walmart, discount grocers, and dollar stores, spending a greater share of their grocery dollars there than at others,” the report says. “[And] in general, low-income shoppers, particularly those on the lowest end of the income scale, don’t have the resources to aggressively hunt deals.”
So if you’re not on the shelf at Dollar General, you’re likely missing out on sales.
And while it’s long been thought that candy was recession-proof — thanks to its mix of a lower price tag and its treat appeal — when the recession really never ends, confectionery companies have to adjust.
“Low-income consumers’ purchasing is ... concentrated on a narrower range of categories focused on essentials, and they’re less likely to buy fresh perimeter categories as well as ‘extras,’ like ice cream,” the Hartman Group explains.
It’s very likely that extras also include candies and chocolates.
And this is all based on a relatively good economy. Many experts are predicting a looming recession, which will only make these trends more pronounced. So, it’s only common sense to believe that confectionery companies that respond to these trends now will be a lot more likely to weather the economic storm.