In today’s rapidly changing retail landscape, staying up-to-date with in-store shopping habits is critical. Companies that know which consumer segments are shopping at which chains, when and how often shoppers visit stores, and how these patterns are evolving can stay ahead and thrive despite a challenging economic climate.
Our latest white paper leverages location analytics to analyze changes in consumer behaviors and demographics across multiple industries and offers insights that can help retailers and CPG companies better cater to today’s brick-and-mortar visitors. Below is a taste of our findings. For the full report, click here.
Higher-Income Households are Going to Mid-Range Stores
Inflation and wider economic concerns have dominated headlines from mid-2022 into 2023. The increase in prices shifted consumer spending and behaviors, with some shoppers choosing to trade down from their usual brands and switch to lower-cost alternatives. Comparing the demographic or psychographic attributes of the population in a given chain’s potential and captured market can reveal which audience segments are favoring which types of retailers.
A chain's potential market consists of the areas where visitors to the chain’s venues come from, weighted according to the population size of each census block group of the trade areas. The chain’s captured market consists of the areas where visitors to the chain’s venues come from, but weighted according to the actual visit share to the POI from each census block. In other words, a chain’s potential market includes the population that lives in the chain’s trade areas, while the captured market reveals the demographic and psychographic characteristics of the audiences that visit the chain in practice. Digging into the captured and potential market for two major chains, Target and Ulta, reveals which audience segments are particularly drawn to these brands.
Target: Reaching Beyond Its Potential Market
Target has been a retail darling over the past few years, displaying a marked resilience in the face of economic headwinds, and an analysis of its trade area suggests the company’s stores are still attracting a coveted visitor segment.
Comparing Target’s potential market to its captured market reveals that the company is attracting a larger-than-expected rate of higher-income households – perhaps due to the higher-income consumers migrating to suburban areas over the past couple years. Data from STI: Popstats indicates that, while 17.8% of Target's potential market includes households earning over $150,000 a year, that number rises to 19.6% within its captured market. The higher income among Target’s captured market visits highlight Target's ability to attract financially comfortable consumers – which may be giving the company a leg up during the current inflation-induced retail downturn.
The data also sheds light on the shopping preferences of financially stable individuals, suggesting that they recognize the value offered by mid-range retailers like Target. Retailers, CPG managers, and even dining industry stakeholders can use this information to tailor their product offerings and market their budget-friendly options to a higher-income customer segment.
The Ulta-mate Beauty Destination
Ulta has established itself as a beauty powerhouse, and the brand’s positive foot traffic trends consistently defy the odds in a challenging economic environment. The company has long been a leader in selecting products that resonate with its wide customer base, opting to house mass and prestige brands under one roof. Similarly to Target, Ulta appears to be successfully catering to all income brackets – and the brand seems particularly strong among high-income shoppers.
The share of households with a median annual HHI of $150K is larger in Ulta’s captured market than its potential market visits. But these results vary across states. New Jersey Ulta stores seem to have a significantly larger share of high-income households in their captured market relative to their potential market, which may also be attributed to high-income new residents in the Garden State’s suburbs. Meanwhile, the captured and potential trade areas of Illinois and California Ulta stores seem to show less variance. Understanding where affluent consumers are shopping in more affordable stores can help brands gear their product selections and marketing strategies accordingly to reach this desired cohort.
In a period marked by economic uncertainty, understanding which audience segments remain willing to spend – and which are looking to cut back – can be crucial for consumer-facing companies. Target and Ulta trade area data indicates that it is possible to appeal to affluent shoppers while catering to a wide range of customers and remain relevant in a changing marketplace.
For more insights into 2023 brick-and-mortar consumer behavior, read the white paper here.
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