As economic uncertainty grows, job losses mount and recession fears multiply, the separation between high-income and low-income consumers is stark.
That wealth gap is creating a divide between consumer segments, as the affluent continue to spend and lower-income shoppers spend less as they budget paycheck to paycheck.
The disparity has grown since the pandemic, when credit card debt was low and financial obligations such as student loans were postponed, said Gary Stibel, founder and CEO of New England Consulting Group.
“It’s all gone,” he said, noting that many consumers piled up debt in recent years with buy now, pay later services, for example. “You’ve now got this huge chunk of the population that is working two jobs and living paycheck to paycheck.”
Experts agree that the income disparity will worsen, particularly amid ongoing federal layoffs and new tariffs driving up prices for everything from automobiles to footwear.
Though consumers don’t yet know how high prices will rise, key metrics around job security, indicating concern level, have been ticking up, according to Katie Thomas, who leads the Kearney Consumer Institute.
“Across segments and sectors, people feel this uncertainty and that’s what will drive a meaningful pullback in spend,” she said.
Spending is already divided, with the majority of dollars coming from the affluent.
A recent report on U.S. consumer spending from Affinity Solutions found that high-income shopping accounted for 54% of spending in February; middle-income shoppers comprised 31% and low-income shoppers covered just 15%.
The gap is putting pressure on brands, which need to be precise with messaging and ad targeting, as well as carefully managing product assortments at a time when marketing budgets are strained.
“If you look down the road as a marketer, you have to say we’re going to see an even greater income dispersion in the world to come,” said Tim Calkins, clinical professor of marketing and associate chair of the marketing department at Northwestern’s Kellogg School of Management. “And that has a huge impact on how you think about opportunities and deploying resources.”
Here’s five tips for marketers looking to advertise to an already bifurcated customer base.
