High and Low Income Consumers — A Winning Strategy?
Will a strategy aimed at the needs of the disadvantaged actually produce healthy returns to your bottom line? Evidence is emerging that the upper and lower classes, not the middle class, sustained the grocery business as the recession first hit. It’s another sign that there might be a bifurcation occurring in our industry warranting a deeper understanding of their consumption habits.
From 2007 through 2010, the Supplemental Nutrition Assistance Program (SNAP) pumped more than $70 billion into the grocery retail industry. This was due in part to more Americans participating in the program, but the fact remains that the program provided a cushion for those who might have been at nutritional risk, which, in turn, kept consumers going to food stores.
Strategies aimed at courting consumers on assistance programs should also include in-store tactics at the major supercenters. Our Food and Beverage Consumption Study shows just under a quarter of their dishes were sourced from a supercenter, while that number drops to 15 percent for other consumers. Clearly these consumers are stretching their grocery spend by utilizing the lower-priced options these stores make available.
This doesn’t mean SNAP/WIC (Women, Infants, Children) consumers are in the store frequently. In fact, the study also reveals that 29 percent of shoppers on assistance programs visit the grocery store every two weeks or less, while other consumers shop more frequently. This might be a function of when SNAP cards are replenished, as they are only refilled at certain times. Aligning any in-store strategies with the card refill cycles would yield the best results when connecting with these consumers.
Manufacturers should also consider adding additional languages to their labels to ensure the greatest number of people will understand their products’ nutritional value. Our NET® Hispanic information shows a disproportionate number of Hispanics participate in the WIC program. Hispanics are four times more likely to be in the WIC program, with Spanish language dominant Hispanics seven times more likely to be enrolled, compared to non-Hispanics. This certainly stresses the need for Spanish on labels, but since this is only one minority, it hints of other languages spoken by other minorities who are disproportionately represented in assistance programs.
As for the consumption behaviors of consumers on assistance programs, there is evidence that many may need assistance with understanding proper nutrition or that nutrition is out of their reach. First, they have a higher propensity to skip meals compared to non-participants. These can be considered lost opportunities to consume more fruit, vegetables, and dairy – the three main areas of the USDA MyPlate where most consumers fall short of the guidelines. For instance, at both lunch and dinner, consumers on assistance programs consume nearly half as many green salads as other consumers. At the same time, the beverages they consume at these times are more likely to be sweetened. In between the main meals, when fruit is a top item for snacking, SNAP and WIC consumers eat it less often compared to that of other consumers.
Despite the fact that skipping meals is a common occurrence, there is a greater rate of obesity among these consumers. While obesity is an issue across the nation, 39 percent of SNAP and WIC consumers are obese compared to 30 percent of non-participants, shown by National Eating Trends® (NET) information.
Marketers in the food and beverage industry would be wise to understand the eating habits of the disadvantaged; the assistance programs provided to these consumers could actually make it financially worthwhile to engage these consumers.
If you are interested in learning more about the eating habits of consumers on assistance programs, please contact Darren Seifer at Darren.Seifer@npd.com.
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