Survey explores affluent consumers' preferences

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By: Wise Marketer Staff |

Posted on February 21, 2007

While affluent consumers appreciate 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 by The Nielsen Company.

The survey found that US households with an annual income of US$100,000 or more tend to patronise club stores (such as Costco or Sam's Club) and upscale mass merchandisers (such as Target) in search of "a deal", as well as national and higher-end grocery chains that fulfil their desire for fresh produce, meat, poultry and seafood, and a good deli section and alcohol selection.

Quality and variety
"Affluent shopper preferences are all about product quality and variety, with value as an added bonus," explained Todd Hale, senior vice president of consumer & shopper insights for Nielsen Homescan & Spectra (an operating unit of The Nielsen Company).

While strong fresh food sections act like a magnet for affluent shoppers, who make 56% more trips to purchase fresh produce, high quality and a good selection have got to be present as well.

Key affluent trends
Analysts at Nielsen found that the key affluent household trend is 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, with income of at least US$100,000 per year, and residing in one of the 17 major markets covered by Nielsen.

According to US Census estimates, affluent families now make up 17% of US households, and this figure is expected to reach 22% by 2010.

Favoured channels
While the affluent shop at all the mainstream retail channels, they are more than twice as likely to patronise a warehouse club store and 9% more likely to frequent a mass merchandiser compared with households that earn US$20,000 or less each year.

Conversely, the lower income households are 74% more likely to shop at dollar stores, 42% more likely to patronise a convenience/gas store, and 21% more likely to frequent a supercentre.

According to Nielsen, there are no real surprises about format preferences, which almost perfectly reflect retailer merchandising and targeting strategies. Favourite store banners among the affluent include national grocery chains such as Kroger and Safeway, mass merchandisers such as Target and Wal-Mart, and niche formats such as Whole Foods. Less affluent consumers prefer retailers such as Save-A-Lot, Aldi and Kmart.

Popular alternatives
Alternative retail channels enjoy particular popularity among affluent shoppers in search of knowledgeable sales staff, wider product selections, and competitive prices. Higher income shoppers positively flocked to department and office supply stores, electronics outlets, news and bookstores, hardware and home improvement centres, pet stores, and liquor stores.

"The phrase 'if you can't beat them, join them' sums up a notable twist on the promotions front," said Hale. "Grocers interested in retaining their affluent customer base have added a somewhat counter-intuitive 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."

Spotting the big spender
Wealthy shoppers have more money to spend, and they do so willingly. The typical affluent warehouse club shopper spends US$111 per trip (US$46 more than a lower income household). The same high-spending trends holds for other formats as well: the affluent family total for a typical grocery trip is US$47, while on a mass merchandiser trip it totals US$56. In both cases, the figure is US$18 more per trip than for an average 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.

Media preferences
Affluent shoppers tend to visiting CNN, ESPN, The Weather Channel, Google and AOL websites on a regular basis. Cable TV is another medium favoured by the wealthy, who are also regular viewers of The Golf Channel, BBC America, CNN Headline News, CNBC and ESPN.

The wealthy also tend to tune in to classical radio, news/talk programming, sports shows, jazz and alternative/modern rock stations. And being avid readers, their subscriptions tend to include BusinessWeek, Money, Golf, Newsweek and consumer reports magazines.

Hale concluded: "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."

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