The Basics, Some Extras & Savings—You'll Need $150,000 a Year
Most consumers still feel as though they are struggling to afford the basic necessities.
“Every retailer wants to think ‘Everything I sell is worth it! Shoppers will love it’, but the hard reality is 52 percent Americans feel they barely have enough to afford the basics," said Candace Corlett, president of WSL/Strategic Retail.
Corlett's comments are based on a survey WSL/Strategic Retail conducted of 1,950 consumers in December regarding their shopping habits.
Consumers have moved past the fear that was seen in the firm's 2010 How America Shops survey, Corlett said. However, they are returning to stores, but with limits.
Feeling the Strain
And it’s not just the lower-income consumers feeling the strain. Three groups are experiencing higher rates of financial struggle: those with incomes between $100,000 and $150,000, those aged 18 to 34 years old, and women.
According to this year's “How America Shops” survey, it now takes an income of more than $150,000 to be able to afford the basics, some extras and to save too.
As for the once-coveted 18- to 34-year-old market, it is now the demographic struggling the most when it comes to buying power.
In addition, about 75 percent of women say it’s important to get the lowest price on everything they buy, up 12 percent points from 2008. In this group, 68 percent are using coupons regularly and 45 percent are only buying items on sale.
Since the financial crisis, retailers have employedheavy promotions, perhaps unintentionally cementing these shopping behaviors.
“Retailers have trained women to never pay full price and take pride in being a smart shopper,” Corlett said. “It’s a real struggle to sell anyone anything at full price.”
Because price has become central for decision making, some brand names will suffer, particularly with women shoppers, Corlett said. Some 67 percent of women said that trusted brands are not worth paying for, and they are pausing to consider whether it’s a smart use of their money.
“It’s an income issue, but it’s also a value issue," she said. "We have lost that mindset of we have to buy, buy, buy, buy. . .we’ve built in a lot of push back. Retail sales will be up, but people aren’t buying everything they want, they are buying what they need.”
As a result, retailers need to ask themselves: can they afford to take price increases if they are selling to a shopper that can barely afford the basics?
"Frivolous is out,” she said.