retail news in context, analysis with attitude

by Michael Sansolo

Ignore for a second the on-going political debate about tax cuts and shift to this: how much money does it take for people to feel well off? And if so, what does that tell you about your shoppers and their desire to find value.

The Washington Post ran an article this past weekend examining the financial fortunes of families earning $250,000 per year, the threshold of wealth that was the fulcrum of the recent tax cut debate. There was a time that couples earning a quarter of a million dollars a year were easily classified as upper class economically or simply rich. The Post carefully examined the cost of living for these families in the Washington, DC, area and in other relatively affluent areas around the country to see how well they are really doing today.

The bottom line was that even at $250,000 people can struggle.

Simple statistics tell us that the vast majority of you reading this article today might have little sympathy for these families because you earn far less than $250,000 per year and are having struggles of your own. As the Post says, “By any measure, a $250,000 household income is substantial. It is six times the national average household income and just 2.9% of couples earn that much.” In fact, most Americans have little hope of ever earning that much money in a year.

In part, the challenges these families have balancing their costs are due in part to their lifestyles including the size of their homes, the quality of their cars and even some of the assorted costs of child care, education and more. Many of you would love to have those problems.

But these are problems nonetheless and that means even well-off people struggle to achieve financial security. And that means they come into supermarkets, one of the expenses they, too, face each week, with some sense of economizing on their minds, which is the issue we have to consider.

The sad truth is that every group of shoppers is coping with some sense of economic insecurity these days, which means that economizing and value hunting rule all the aisles. More than two years into the current economic situation the pressure we see from shoppers for price cutting, sales and budget shopping is only growing stronger. The Post article only reminds us that the situation impacts every demographic group as even the well-off feel stressed.

What’s more, the situation could actually get worse. While there are some (but sadly few) positive economic signs for the coming year, there are many issues for worry heading into 2011. Prices are starting to rise on everything from petroleum to basic grains, all of which means there will be pressure for prices to rise on the vast majority of products in the supermarket.

Yet, shoppers are likely to be more resistant than ever to higher prices, more willing to trade off to lower priced choices and more aware of where and when these changes have to be made. In other words, today’s tough competitive situation is only likely to get tougher.

That’s probably not the news you were hoping for today, but that’s the news. The only question is what you’ll do about it in a time when even the wealthy feel insecure.

Michael Sansolo can be reached via email at . His new book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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