Retail Consumer Demographics and Lifestyles

Demographics are objective, quantifiable, easily identifiable, and measurable population data. Lifestyles are ways in which individual consumers and families (households) live and spend time and money. Visit our Web site ( for posts on these topics.

1. Consumer Demographics

Consumers, both as groups and as individuals, can be identified by such demographics as gender, age, population growth rate, life expectancy, literacy, language spoken, household size, marital and family status, income, retail sales, mobility, place of residence, occupation, education, and ethnic/racial background. These factors affect retail shopping and retailer actions.

A retailer should have some knowledge of overall trends, as well as the demographics of its own target market. Table 7-1 indicates broad demographics for 10 nations around the world, and Table 7-2 shows U.S. demographics by region. Regional data are useful since most retailers are local and regional.

In understanding U.S. demographics, it is helpful to know these facts:

  • The typical household has an annual income of $54,000, according to the Federal Reserve. The top one-fifth of households earns approximately $100,000 or more; the lowest one-fifth earns approximately $20,000 or less.2 If income is high, people are apt to have discretionary income—money left after paying taxes and buying necessities.
  • About 12 percent of people move each year; two-thirds of all moves are in the same county.
  • There are about 6.5 million more U.S. females than males; 57 percent of adult females are in the labor force.3
  • Most U.S. employment is in services. In addition, there are now more professionals and white-collar workers than before and fewer blue-collar and agricultural workers.
  • Approximately 32 percent of all U.S. adults age 25 and older have at least a 4-year college degree.4
  • The population comprises many ethnic and racial groups. African Americans, Hispanic Americans, and Asian Americans account for one-third of U.S. residents—a steadily rising figure. Each of these groups represents a large potential target market; their total annual buying power is more than $3.4 trillion.5

Although the preceding gives an overview of the United States, demographics vary by area (as Table 7-2 indicates). Within a state or city, some locales have larger [or smaller] populations and more [or less] affluent, older [younger], and better-educated [or less-educated] residents.

Because most retailers are local or operate in only part of a region, they must compile data about the people living in their trading areas and those most apt to shop there. For a given business and location, the characteristics of the target market (the customer group to be sought by the retailer) can be studied on the basis of some combination of these demographic factors—and a retail strategy planned accordingly:

Market size. How many people are in the potential target market?

  • Is the potential target market more male or female, or are they equal in proportion?
  • What are the prime age groups to which the retailer wants to appeal?
  • Household size. What is the average household size of potential consumers?
  • Marital and family status. Are potential consumers single or married? Do families have children?
  • Is the potential target market lower income, middle income, or upper income? Is discretionary income available for luxury purchases?
  • Retail sales. What is the area’s sales forecast for the retailer’s goods/services category?
  • How important is the birthrate for the retailer’s goods/services category?
  • Mobility. What percent of the potential target market moves into and out of the trading area yearly?
  • Where people live. How large is the trading area from which potential customers can be drawn?
  • Employment status. Does the potential target market include working women?
  • In what industries and occupations are people in the area working? Are they professionals, office workers, or of some other designation?
  • Education. Are potential customers college educated?
  • Ethnic/racial background. Does the potential target market cover a distinctive racial or ethnic group?

2. Consumer Lifestyles

Consumer lifestyles are based on social and psychological factors and are influenced by demo­graphics. As with demographics, a retailer should first have some knowledge of consumer lifestyle concepts and then determine the lifestyle attributes of its own target market.

These social factors are useful in identifying and understanding consumer lifestyles.

  • A culture is a distinctive heritage shared by a group of people that passes on a series of beliefs, norms, and customs. The U.S. culture stresses individuality, success, education, and material comfort; there are also various subcultures (such as African-, Asian-, and Hispanic-Americans) due to the many countries from which residents have come.
  • Social class involves an informal ranking of people based on income, occupation, education, and other factors. People often have similar values in each social class.
  • Reference groups, of which there are several types, influence people’s thoughts and behav­ior. For example, a group that someone wishes she or he belonged to but does not is called an aspirational group; a group that a person does belong to is referred to as a membership group; and a dissociative group is one in which a person belongs but wishes he or she did not.

Face-to-face groups, such as families, have the most impact. In reference groups are opinion leaders whose views are respected and sought.

  • The family life cycle describes how a traditional family moves from bachelorhood to children to solitary retirement. At each stage, attitudes, needs, purchases, and income change. Retailers must also be alert to the many adults who never marry, divorced adults, single-parent families, and childless couples. The household life cycle incorporates life stages for both family and nonfamily households.
  • Time utilization refers to activities in which a person engages and the time allocated to them. The broad categories are work, transportation, eating, recreation, entertainment, parenting, sleeping, and (retailers hope) shopping. Today, the number of dual-earner households continues to increase; many people have multiple jobs to maintain the rise in standards of living. This affects retailers in that consumers have less discretionary time and therefore allocate less time to shopping.

These psychological factors help in identifying and understanding consumer lifestyles:

  • A personality is the sum total of an individual’s traits, which make that individual unique. Traits include a person’s level of self-confidence, innovativeness, autonomy, sociability, emo­tional stability, and assertiveness.
  • Class consciousness is the extent to which a person desires and pursues social status. It helps determine the use of reference groups and the importance of prestige purchases. A class­conscious person values the status of goods, services, and retailers.
  • Attitudes (opinions) are the positive, neutral, or negative feelings a person has about differ­ent topics. Attitudes are also feelings consumers have about a given retailer and its activities. Does the consumer feel a retailer is desirable, unique, and fairly priced?
  • Perceived risk is the level of risk a consumer believes exists regarding the purchase of a specific good or service from a given retailer, whether or not the belief is correct. There are six types: functional (Will a good or service perform well?); physical (Can a good or service hurt me?); financial (Can I afford it?); social (What will peers think of my shopping here?); psychological (Am I doing the right thing?); and time (How much shopping effort is needed?). Perceived risk is high if a retailer or its brands are new, a person is on a budget or has little experience, there are many choices, and an item is socially visible or complex. See Figure 7-3. Firms can reduce perceived risk with information.
  • The importance of a purchase to the consumer affects the amount of time he or she will spend to make a decision and the range of alternatives considered. If a purchase is important, perceived risk tends to be higher, and the retailer must adapt to this.

A retailer can develop a lifestyle profile of its target market by answering these questions and then using the answers in developing its strategy:

Culture: What values, norms, and customs are important to the potential target market?

  • Social class:Are potential consumers lower, middle, or upper class? Are they socially mobile?
  • Reference groups:To whom do people look for purchasing advice? Does this differ by good or service category? How can a firm target opinion leaders?
  • Family (or household) life cycle:In what stage(s) of the cycle are most potential customers?
  • Time utilization:How do people spend time? How do they feel about their shopping time?
  • Personality:Do potential customers have identifiable personality traits?
  • Class consciousness: Are potential consumers status-conscious? How does this affect purchases?
  • Attitudes:How does the potential target market feel about the retailer and its offerings in terms of specific strategy components?
  • Perceived risk: Do potential customers feel risk in connection with the retailer? Which goods and services have the greatest perceived risk?
  • Importance of the purchase:How crucial are the goods/services offered to potential customers?

3. Retailing Implications of Consumer Demographics and Lifestyles

Demographic and lifestyle factors need to be considered from several perspectives. Here are some illustrations. By no means do the examples cover the full domain of retailing.

GENDER ROLES The many working women who put in 60 to 70 hours or more each week between their job and home responsibilities have altered lifestyles. Compared with women who have not worked outside the home, they tend to be more self-confident and individualistic, more con­cerned with convenience, more interested in sharing household tasks with spouses or significant others, more knowledgeable and demanding, more interested in leisure activities and travel, more involved with self-improvement and education, more appearance-conscious, and more indifferent to small price differences among retailers. They are less interested in unhurried shopping.

Due to the number of working women, male lifestyles are also changing. More men now take care of their children, shop for food, do laundry, wash dishes, cook, vacuum, and clean the bath­room. Male grocery and mass merchandise shoppers in the United States are steadily increasing, especially with Millennials.6 The generational shift from traditional roles is bolstered by mobile E-commerce and millennial men’s savviness with smartphones and shopping apps. In the future, there will be still more changes in men’s and women’s roles. The clout and duties of husbands and wives will be shared more often. Retailers need to appreciate this trend. See Figure 7-4.

CONSUMER SOPHISTICATION AND CONFIDENCE Many shoppers are now more knowledgeable and cosmopolitan; more aware of trends in tastes, styles, and goods and services; and more sophisticated. Nonconforming behavior is accepted when consumers are self-assured and better appreciate the available choices. Confident shoppers experiment more. For example, today, it may be considered an asset to be viewed as “cheap,” which to some shoppers means “smart.” Thus, for example, Ikea offers style at low prices, partly since consumers are responsible for self-assembly of the furniture they buy. Unlike other fashion-based apparel retailers, Zara has little in-store stock and updates its fashion apparel often. These combined strategies motivate Zara customers to visit its stores often. This also encourages shoppers to immediately buy an item since they fear that it may quickly sell out and not be available on subsequent store visits.7

POVERTY OF TIME The increase in working women, the desire for personal fulfillment, the job commute, and the need for some people to have second jobs has led to many consumers feel­ing time-pressured. Retailers can react to time-pressured consumers through various strategies. Included in those strategies are offering pre-wrapped gift items, store pick-up windows for pur­chases ordered on the Web, home delivery of groceries ordered online, in-home delivery and instal­lation of appliances (on one home visit), and longer store hours (including 24/7). See Figure 7-5.

COMPONENT LIFESTYLES In the past, shoppers were typecast, based on demographics and life­styles. It is widely recognized that shopping is less predictable and more individualistic now, and shopper profiling based traditional segmentation strategies may have low predictive ability for a majority of retailers. This shopping profile is more situation-based, hence, the term component lifestyle.

So-called hybrid consumers are increasingly opting both to trade up to premium products for high-involvement, discretionary spending, and to trade down to budget options for low-involvement necessities in various product and service categories.8 Retailers with mid-priced alternatives are losing share in their polarized consumption basket. It becomes increasingly more complicated for retailers when consumers mix luxury and budget products within the same category. Why will they buy a luxury auto and then go to Costco for replacement tires? Why will they spend several dollars for coffee at Starbucks but feel $1.49 is too high for a fast-food hamburger? The rapid growth of store brands underscores how many retailers are responding by managing a brand portfolio that includes multiple value propositions, such as a generic, a standard, and a premium brand.

4. Consumer Profiles

Considerable research has been aimed at describing consumer profiles in a way that is useful for retailers. Here are three examples:

  • Boston Proper is an online and catalog retailer that appeals to a customer group that is not well served. The retailer’s target market is women aged 35 to 60. It features Bohemian-inspired fashions as well as classy, casual, and sports apparel. When Chico’s acquired Boston Proper in 2011, the retailer operated online and through catalog sales exclusively. Under Chico’s leadership, Boston Proper launched its first stores in 2013 and now has 13 locations in Florida, Georgia, North Carolina, and Texas. Chico’s plans to open hundreds of Boston Proper stores throughout the United States.9
  • About one-sixth of the people who live in the United States self-identify as Hispanic or Latino—up by 2.5 percent from 2010 to 2015, compared to the 2005 to 2010 figure of 51 million people. Hispanic women will make up about 30 percent of the total U.S. female population by 2060. This group is especially important because it represents close to one-fifth of the total women’s fashion-based footwear market, according to research by NPD Group. One strategy used by retailers seeking to attract this market is to use Hispanic celebrities in product branding. Television star Sofia Vergara, on Forbes’s list of the wealthiest women, helped launch a product line for Kmart. Similarly, Latina singer Thalia was involved in a Macy’s brand launch.10
  • Claritas Prizm segmentation system for marketing (owned by the Nielsen Company) divides American households into various lifestyle categories. These are the four wealthiest groups: (1) Upper crust—America’s wealthiest lifestyle consisting of opulent empty-nesting couples over the age of 50. (2) Networked neighbors—The nation’s second wealthiest lifestyles represent­ing suburban wealth. This group embraces technology. (3) Movers and shakers—Dual-income couples who are highly educated, typically between the ages of 45 and 64. Many of these group members are business professionals. (4) Young digerati—Tech-savvy individuals who reside in fashionable urban neighborhoods and love trendy restaurants and clothing boutiques.11

Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.

3 thoughts on “Retail Consumer Demographics and Lifestyles

  1. gralion torile says:

    Very efficiently written story. It will be useful to anyone who utilizes it, including yours truly :). Keep doing what you are doing – can’r wait to read more posts.

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