Branded products still account for the bulk of consumer packaged goods (CPG) purchases across all income strata, finds Nielsen [download page] in a September 2012 report, and the variance among income levels is relatively minor. For the 52-week period ending in late February 2012, and using dry grocery edible goods as an example, branded products represented 83% of unit sales to upper-income households (100k+), 79% to middle-income households ($30k-$100k), and 76% to lower-income households (<$30k). The same correlation between household income (HHI) and national brand preference holds true for 2 other edible categories, being frozen and dairy. Unit sales of branded frozen edibles hovered around 77% for all economic strata, though branded products represents just 63% of dairy unit sales to upper-income households, 58% to middle income and 55% to lower-income households.
Details from “The Economic Divide: How Consumer Behavior Differs Across the Economic Spectrum” indicate that the percentages are fairly flat in the non-edible categories of non-food and general merchandise. For example, there is just a 2% point difference in unit sale share for non-food branded products when comparing the lowest and highest income groups. The same is true for general merchandise. The gap is more pronounced in health and beauty, at 7% points.
According to an Accenture study released in July, more than one-third of consumers have increased their store brand purchases in recent years, and most of those would not return to branded products even with a rebound in discretionary income. The Nielsen report shows that even amid this sentiment, national brands continue to dominate.
Grocery, Mass Merchandisers Still Most Popular Channels
Nielsen finds that despite a broad choice of retail channels (e.g., drugstores, club stores, dollar stores and e-commerce), grocery and mass merchandisers represent the bulk of CPG spending across all HHI levels.
In terms of dollars spent, grocery stores account for 47% of purchases on average across HHI levels. Grocery accounts for 46% of purchases in the lower-income category, 47% in the middle-income segment, and 49% in the higher-income bracket.
Mass merchandisers represent the second largest percentage of total spend across all HHI levels, but their share of dollar spend declines as income rises, from 25% to 23% to 17%.
Certain channels skew to specific income groups. Club stores and e-commerce sites skew toward higher income households (with index scores of 183 and 122 respectively), while convenience and dollar stores attract lower income households (138 and 162 respectively). (The index score is calculated as % of revenue / % of households x 100.)
The higher income segment is much more likely to shop at specialty retailers (e.g., Whole Foods, Trader Joe’s), with an index score of 222, while the lower HHI segment is more likely to be found shopping at value retailers (127).
