How brands can meet the moment for lower-income consumers

The insight: Lower-income consumers crave brand messaging that recognizes their challenges and offers practical solutions, such as educational aids and flexible payment options, according to a Collage Group report.

This offers an opening for marketers to connect with this segment.

A pressured population: Inflation is bearing down on these consumers, who cite rising stress as they strain to afford basic needs.

• Gen Zers and baby boomers represent the largest shares of lower-income Americans, at 33% and 35%, respectively. Millennials account for 18% and Gen Xers 14%, per 2023 American Community Survey data cited in the report.
• Hispanic and Black people represent 22% and 18% of the low-income population, respectively, while whites account for 50%.

Economic burdens have affected this group’s spending.

• More than three-quarters (78%) of consumers viewed fast food as a luxury, an April LendingTree survey of just over 2,000 people found. Those earning $30,000 felt particularly stretched.
• Households with annual incomes of less than $50,000 were curbing eating out, per an August Ipsos survey. Forty-three percent said they had cut back on dining at sit-down restaurants, compared with 36% of households earning $50,000 to $100,000 a year who were doing the same.

Headwinds for these consumers could intensify as the incoming Trump administration considers spending caps for food stamps and other US social safety net programs.

Brand strategies: Brands across various industries are stepping up efforts to market to and serve poorer communities.

• JPMorgan Chase plans to open nearly 100 branches in low-income areas, bucking a trend of banks shuttering locations. Other banks are offering tools to help customers improve their financial knowledge and resilience; Wells Fargo recently offered blended cooking/financial literacy classes in New York with a focus on reaching Latinos.
• Kraft Heinz is distributing more of its products in value-oriented outlets like dollar and club stores to reach inflation-weary shoppers.
• Amazon, Target, and Albertsons are expanding their private label brands, which tend to cost less. Sixty percent of Americans with lower incomes prefer to buy store-label or generic brands, the Collage Group report noted.

Our take: Brands and marketers who recognize the hardships faced by low-income consumers and offer solutions to address them can build stronger relationships with this determined customer segment, offering longer-term growth opportunities.

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