Nielsen: Affluent Shoppers Favor Warehouse Clubs

by , Feb 19, 2007, 5:00 AM
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Affluent shoppers are selective, but keenly attuned to looking for value for their dollars, confirms a new study from The Nielsen Co.

While consumers with household income of $100,000+ do shop the mainstream retail channels, they're also more than twice as likely to patronize a warehouse club store like CostCo or Sam's Club--and 9% more likely to frequent a mass merchandiser--than consumers with household incomes of $20,000 or less.

"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. "The poor need low prices, and the rich love low prices."

Hence, availability of a wide variety of fresh foods draws wealthier consumers to grocery stores like Kroger and Safeway and niche formats like Whole Foods.

"Private-label offerings tend to be the least important factor in terms of where affluent consumers choose to shop," Hale told Marketing Daily. "Still, as stores like Wegman's and CostCo have demonstrated, these shoppers will buy private-label brands if they are perceived as 'premium' or high-quality private label products."

Similarly, the wealthy don't just go to any mass merchant: They choose ones that they perceive as offering variety and quality, including Target and Wal-Mart.

Affluent consumers are also big fans of alternate outlets that offer wide product selection, competitive prices and knowledgeable salespeople. In addition to department stores, they favor niche outlets like office supply, electronics, pet and liquor stores, news/bookstores and hardware/home improvement centers.

For this reason, a growing number of grocers are responding with an "if you can't beat 'em, join 'em" strategy. "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," observes Hale.

In contrast, lower-income households 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. Favored retailers include Save-A-Lot, Aldi and Kmart.

No shock here: Wealthy shoppers spend more. On average, they spend $111 per warehouse club trip ($46 more than lower-income households); $47 per grocery trip ($18 more); and $56 per mass merchandise trip (also $18 more).

Hale adds that these shoppers spend far more on alcoholic beverages than low-income shoppers--buying greater quantities, and also buying more expensive liquors/brands. "It's no wonder that grocery stores are devoting more space to liquor, or that you can get a glass of wine in some of the Whole Foods stores and restaurants," he notes.

The wealthy are also voracious media consumers. Cable TV is a staple, with favorites including The Golf Channel, BBC America, CNN Headline News, CNBC and ESPN. Avid readers, these consumers are likely to subscribe to magazines such as BusinessWeek, Money, Golf, Newsweek and Consumer Reports. They are also big fans of classical radio, news/talk programming, sports shows, jazz and alternative/modern rock offerings.

Perhaps most intriguingly, in Hale's opinion, their regular visits to sites like CNN, ESPN, The Weather Channel, Google and AOL represent "a real opportunity 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."

Nielsen analysts found that the affluent household profile trends toward larger white families with household heads working in white-collar jobs, female heads of household between the ages of 35 and 54, and residency in one of 17 major Nielsen markets.

According to U.S. Census estimates, 17% of U.S. households are affluent. That number is projected to rise to 22% by 2010.

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