NEW YORK — The era of people shopping in a broad range of venues, regardless of their income levels, may be drawing to a close.
With a significant gap between income levels persisting, despite some gains by middle- and lower-income consumers, a pragmatic mind-set is taking hold and producing a sense of prudence that’s putting the brakes on the free-spending sensibility that has driven American consumers during much of the Nineties and early 21st century, a new study has found. This new frame of mind is increasingly prompting people of different income levels to shop in different places, based on their means; to focus more sharply on prices, regardless of their income, and to display less willingness to pay a premium for convenience than was the case as recently as 2004.
Those are the broad outlines of today’s consumer landscape as drawn in “How America Shops 2006,” a biannual study conducted by market researcher-consultant WSL Strategic Retail.
Describing a world in which purchasing is constrained by people’s sense of life as “never normal,” WSL president Wendy Liebmann observed: “There is great caution about not knowing what tomorrow will bring, among consumers of all economic levels.” Stirring this feeling of unease, she said, are political and economic upheavals, from the war in Iraq to the lengthening list of underfunded pension plans, as well as natural disasters, most notably the aftermath of Hurricane Katrina.
It’s playing out in a “Back to the Future” scenario — one that harks back to the Eighties — with weekly purchases being transacted mostly in mass merchants, superstores and dollar stores by women with annual household incomes south of $45,000, and in department stores, specialty stores, drug stores and warehouse clubs by women in homes with annual incomes exceeding $75,000.
“Many consumers no longer have sufficient discretionary income to be frivolous,” the new study reports. “As a result, most now shop at places they can best afford.” Those differences have grown wide, WSL has found, with the exception of supermarkets, where people of all incomes still shop weekly, although only two-thirds of American women now do so.
When on the hunt for apparel, for example, women at the upper end of the country’s income spectrum are most often visiting specialty stores and department stores, while those at the lower end are most commonly heading to discount apparel stores and big-box merchants such as Wal-Mart, Target and Costco. “To some extent, it recalls the Eighties,” Liebmann said in an interview, in referring to the income-shopping divide. “It is also influenced by age. Older consumers are still shopping at department stores for apparel, among other things, whereas younger consumers have largely departed for other types of stores.”
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Older consumers, defined by WSL as those 55 through 70, represent the largest net share of women spending less on apparel than they did in 2004, 24 percent, with 34 percent of the cohort spending less for it and 10 percent spending more. By comparison, a net 4 percent of 35- to 54-year-old women are dishing out less for clothing than they did two years ago, while a net 1 percent of 18- to 34-year-old females are expending more.
Perhaps pointing to a difference between spending on discretionary items versus necessities, the biggest incidence of a decrease in apparel purchases came among women with annual household income between $45,000 and $75,000, with a net 12 percent share cutting back — significantly more than the net 7 percent of those in homes with income of $12,000 to $25,000 who reduced outlays for those goods. The growing array of stores such as H&M and Zara, where fashion items can be bought at moderate prices, also could be contributing to the difference.
A nationally representative sample of 761 women and 186 men were surveyed online in November for “How American Shops 2006.” Several of the shopping behavior questions were asked again in February, following Hurricane Katrina, and bore similar responses. Participants were ages 18 to 70, with annual household income ranging from $12,000 to beyond $100,000.
Among 14 categories of purchases, which, according to WSL, have foretold shoppers’ values and moods, a net share of women are spending less for eight of them, including apparel — which has seen the smallest portion of women cutting back, or 7 percent. Fashion accessories, in contrast, have witnessed the biggest chunk of women shelling out less, 36 percent.
With a cloud of uncertainty about the future hanging over their heads, the share of women who are spending less overall than they did in 2004 increased by a net of 17 percent, reflecting the difference between the 19 percent spending more and 36 percent spending less, the study shows. Among men, a net share of 22 percent are spending less. A net 16 percent of African-American women are expending less now than they did in 2004, as are a net 7 percent of Hispanic women.
However, decreases in spending were cited by a net portion of just 3 percent of women with annual household income of at least $100,000, compared with a net 23 percent of those with annual income of $25,000 or less.
In separate polls taken in February and late January by America’s Research Group, consumers said they were looking for deeper discounts on spring apparel — as much as 40 to 60 percent off — than they were in winter 2003, when they indicated they’d be content with discounts of 20 percent, said Britt Beemer, chairman of the consumer marketing consultant.
Additional indications of women’s tighter purse strings in the WSL findings include:
- A net 29 percent are spending less on themselves, versus 22 percent in 2004.
- A net 32 percent are spending less on leisure travel, up from 24 percent in 2004.
- A net 6 percent are spending more on shopping in general, half of the 12 percent share who did so two years ago.
Compared with those three activities, plus saving and investing, education and entertainment, shopping was the only one that showed a net increase in the share of women devoting more money to it, albeit a single-digit one. At the same time, about one-third of women, a net share of 32 percent, said it’s important to get the lowest price on the things they buy; a net 30 percent said they consider whether it’s a good use of their money before they buy something, and a net 25 percent said they’ll go a little farther to shop at a store where they can save money.
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