Youth market no longer retail’s golden ticket. The youth market, 18-34 year olds, has the highest percent of those who do not have enough money to cover their basic needs, with close to a quarter (24 percent ) in financial turmoil. Compared with people over 35, who were able to launch their careers 10 years ago, when times were good, this group is a long way from recovery, compelling retailers targeting this group to seriously rethink their strategies.
Branded products under threat. Shoppers in general are placing a greater focus on price, with two thirds (67 percent ) of women agreeing that trusted brand names are not worth paying more for. More than a quarter (26 percent ) of women admit that while they used to buy brand names they could not afford, they are no longer giving in to this indulgence. This figure is up 7 percentage points from 2010.
Six-figure incomes struggle. It takes a significantly higher income to feel financially secure in this economy, with nearly 30 percent of Americans in the $100-150K income bracket claiming they can only afford the basics. Once considered affluent, six-figure income shoppers are now identifying themselves as middle-income.
“There is a huge fundamental issue when more than half of Americans can only afford basic necessities and people who earn up to $150,000 think they are poor,” said Wendy Liebmann, CEO of WSL Strategic Retail. “Look, American shoppers are moving on and coming back to shopping, but at their own pace. As a result, retail sales are precarious and likely to fluctuate up one month, down the next. That’s not going to change any time soon. Brands and retailers cannot ignore this. They will need to re-think the way they do business over the next three to five years - or longer.”
“The youth market, which has traditionally been known for its enthusiastic spending of discretionary income, has virtually dried up. As today’s young adults struggle to find employment and pay down student loan debt, this demographic now represents the largest percentage of Americans who are challenged to afford even basic necessities,” WSL Stragegic Retail President Candace Corlett said.
Key additional findings:
- A stunning 75 percent of women now say it’s important get the lowest price on everything they buy, up 12 percentage points. from 2008 and up 22 percentage points from 2004. Some old and new methods of ensuring they get the lowest price include:
- 68 percent regularly use coupons to reduce costs -- up 7 percentage points. vs. 2010.
- 45 percent claim they only buy items that are on sale -- also up 7 percentage points
- 43 percent make a point to search online for store discounts before they shop -- up 10 percentage points
- 14 percent of women say they use their mobile phones while in store to see if they can find a lower price, before they buy.
- The “cautious pause” before buying to ask, “Is this a smart use of my money?” (Total: 66 percent , HHI $150K: 47 percent )
- Managing their aspirations by sticking to brands and stores they can afford (Total: 58 percent , HHI $150K: 36 percent )
- Staying out of stores where they might be tempted to overspend (Total: 48 percent , HHI $150K: 28 percent )
- Buying less when they go shopping (Total: 43 percent , HHI $150K: 26 percent )