Death of 'Mass Affluent' Remakes All of Retail
Where one falls on the wealth spectrum has traditionally influenced what they buy and the brands they favor.
According to Scribner, the Mass Affluent had grown in size and importance since the 1970s to become the highest tier of the mass market. He credits the trend for influencing "companies like Wal-Mart (WMT) to creep upwards into organics, Starbucks (SBUX) to make the $3 latte an everyday occurrence and Mercedes to create the C-class to stretch into a lower price point and larger customer base."
As economic shifts pushed those once willing, if not able, to make luxury purchases back to being middle class, they now gravitate towards middle-market brands such as Lee, Plymouth and Virgin Mobile (VM) and stores such as Kmart, J.C. Penney (JCP) and Sears (SHLD).
"I look at shifts in language, and we noticed the return of the word 'frugality.' The other language shift we noticed when we started this study a year ago was references to 'the rich,'" Scribner says. "The words 'the rich' have never appeared in the popular press on an ongoing basis until the last two or three years. It is something you might imagine from the 1920s or something. It is is very much a new kind of conceptual class that has been created.""When we asked people to self-identify, those with incomes under $200,000 were most likely to say they were 'middle class,' and people over $200,000 were most likely to say 'upper middle class,'" he adds. "Nobody in America is going to call themselves rich. It is just not culturally acceptable." The trick for advertisers and marketers is determining how to adjust to a landscape where spending habits have shifted. "My No. 1 recommendation is to do what they did during Watergate -- follow the money," Scribner says. "We've all grown up in the period of mass merchandising. We've grown up in a period where the middle class drove elections, cinema, sales and merchandising. But that's changing now, and we really need to change our marketers mindset and look where the scale of assets are and not what the headcount is." The rise of the Emerging Affluent holds what may be the greatest potential. This category, 5.5 million Americans, works in careers that will eventually deliver affluence -- financial services, legal services and engineering -- but they are still in the low- to middle-management tiers.
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