Struggling Middle Class Worsens Amidst Pandemic Struggles
In a time of economic uncertainty, a survey by Executive Director of The Center for the New Middle Class, Jonathan Walker, reveals that half of people earning a comparable income to their parents' generation feel one unexpected expense away from financial ruin. This is a stark reminder of the financial pressures many households are facing.
The pandemic has brought about a significant shift in consumer behaviour, with people demanding convenience due to stress, leaving little room for a joyful shopping experience. This trend has prompted retailers like Under Armour to appoint a Chief Customer Officer, such as Jim Dausch, to better understand their customers' economic situations and implement customer-centered strategies.
The Pew Research Center defines middle-income households in the U.S. as those making two-thirds to twice the median household income. However, the pandemic has led to a decrease in personal income, disposable personal income, and personal consumption expenditures, according to the U.S. Bureau of Economic Analysis. This decline is reflected in the findings of the Pew Research Center's survey around the pandemic, which shows that 36% of lower-income adults and 28% of middle-income adults reported losing a job or taking a pay cut, compared with 22% of upper-income adults.
The wealth gap in the U.S. has widened over the last few decades. In 2016, the top 1% of U.S. households held more wealth than the middle class, a reversal from before 2010, according to Brookings. This economic disparity is a concern for retailers who may not fully appreciate the financial situation of their customers, which has implications for merchandising, marketing, and other aspects of the business.
Retailers have a dual role in helping return economic stability to more consumers across the income spectrum. As employers, they can provide fair wages and benefits, like companies such as Costco, known for higher-than-average wages and benefits in the industry. As businesses that cater directly to consumers, they can offer affordable products and services that help alleviate financial stress.
The holiday season last year was marked by bargain-hunting due to pandemic-related job and income loss. Retailers would do well to have a "chief customer officer," tasked with understanding the pressures on customers, according to Walker. This understanding can help retailers create strategies that cater to their customers' needs, such as offering affordable products, flexible payment options, and personalised customer service.
Job instability remains high, with new filings relative to the number of jobs in the economy higher than at the peak of the Great Recession, according to Wells Fargo Senior Economist Sarah House. This instability, coupled with the financial pressures faced by many households, highlights the need for retailers to be sensitive to their customers' financial situations.
In conclusion, the pandemic has brought about significant changes in the economy and consumer behaviour. Retailers play a crucial role in helping to alleviate the financial pressures faced by many households. By understanding their customers' financial situations and implementing strategies that cater to their needs, retailers can help contribute to economic stability and foster a more joyful shopping experience.
