For a change, the newly poor rather than the newly rich, represent a growing and huge market.
Hitherto, retail management experts have been extremely enthusiastic about the potential market from those who have become affluent and their big retail spending. Upscale outlets have thrived, while their counterparts at the bottom of the economic scale have been ignored; retailers had little interest there.
Nowadays those whose who are hard up are too important to be disregarded. The average consumer has seen his real income decline over the past few years. Most have been forced to cut down their purchases as credit has disappeared and costs of food, gasoline, post-secondary education and any number of other things, have soared. More and more people are living below the poverty line.
For the first time in 25 years consumer spending per household has declined.
Not only is that a challenge to people’s dreams, but also it has a major problems for governments. Yet, it presents a difficult task for resourceful management. There is money to be made by catering to those at the bottom of the economic ladder.
Retailers clearly have to do something unique to get those consumers to drive to their stores.
Retail managers report that it is not easy to improve price awareness during a time of rising costs, and perceptions about the cheapest place for consumers have been changing. Shoppers increasingly are deciding that some merchandise is not the best value for the money. To counter that, some retailers have been carrying amounts smaller than usual and bypassing the bulk sizes favoured by others. While that means offering items in small packages, it permits consumers to meet basic needs before the next pay day.
As a consequence, frugal shops are prospering. Those somewhat austere outlets are selling basic toiletries or even adding a grocery section. That is reminiscent of the “5 and 10 cents stores,” part of the Woolworth chain in the 1930s.
Entrepreneurs also are adjusting their methods of operation to conform to the more restrained age, offering discounts for cash, and some retailers now have appliances available for rent in place of purchasing them, such as floor polishers or rug cleaners.
Adjusting to that new reality will be easy. Previously, it was assumed that we would be a land of mass affluence and upward mobility. That complacency, however, creates opportunities for the more up to date competitors.
They might provide places to borrow money for short-term purchases. Just as there are “many ways to skin a cat,” there currently is a real chance to capitalize on the widespread need to be thrifty.
Retailers simply must reconfigure themselves.