The rich -- and marketers who cater to them -- just keep getting richer as everyone else struggles through a so-called recovery. That fact of economics could reshape marketing strategies this year, and for years to come.
Last year, the only growth in spending came from people making $100,000 or more annually, said David Calhoun, CEO of Nielsen Co., speaking at the Advertising Research Foundation's annual Re:Think conference in March. If anything, the disconnect between the haves and the have-lesses has only kept widening since. The ConsumerEdge Research monthly tracker, based on surveys of more than 2,000 consumers, helps illustrate this vividly.
Overall, its "Willingness to Spend" index of U.S. consumers has fallen fairly steadily from 103 in May 2010 (just before the so-called summer of recovery) to 96 last May, where 100 equals sentiment levels in December 2009. But willingness to spend has been on the rise lately among the high-income segment -- that 16% of the U.S. population making $100,000 or more annually. Their spending sentiment index rose from 118 in December to 131 in May. Their index is down 6 points from 137 a year ago, but they're the only income group more willing to spend now than they were in December 2009.
For marketers, the growing disconnect in the market can have big implications. Perhaps none feels it more acutely than Walmart, caught in a classic middle-class squeeze.
The $100,000-plus households who traded down to Walmart at the beginning of the recession have been returning to their old shopping haunts. But more of Walmart's core consumers have been trading down to smaller sizes, lower-ticket items and closer locations amid rising gas prices -- all offered by dollar or drug stores. The result: Eight straight quarters of declining same-store sales for Walmart with a ninth a real possibility.