retail news in context, analysis with attitude

Every now and again there are news stories that just seem startling, even in tough times like this. So it was with the news last week that some 44 million Americans are now living below the poverty line. That’s one in seven Americans.

For a single person, the poverty line falls at an annual pretax income of $10,830; for a family of four, at $22,050. In 2009, 14.3 percent of Americans were living below that line, while 50 percent of the country is living in households with income below $49,777.

It strikes me as important to run those numbers because for people at the lowest levels the usual discussions we have about buying new computers, enhanced meals, gourmet cupcakes or any other non-essential use of money is probably far from commonplace. At that level of income, getting by is all that matters. For the 50 percent living on less than $50,000 the discussions are different, but the emphasis on value will be just as high.

For food industry the numbers are stunningly important. Because all of these people need food on a daily basis, and with the percentage of the population living in poverty rising to its highest level since 1959, five years before “the War on Poverty” was declared by President Lyndon Johnson, this promises ongoing change for the food industry. It means likely growth among extreme value formats like Aldi or Dollar stores, which means additional pressure on conventional supermarkets. It means continued emphasis on reduced cost products, including value-priced private label.

Most of all if reminds us that we have lots of different shoppers with lots of different needs. And those who serve them best will likely win, in good times and bad.

And that’s my Monday Eye-Opener.

- Michael Sansolo
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