Top-spending consumers spend more

Press enter to search
Close search
Open Menu

Top-spending consumers spend more

By Michael Johnsen - 08/22/2017

The average household spends $3,400 on packaged goods, but the average grocery banner only captures as much as 20% of that, according to a recent IRI report. “With the overall market not growing, retailers and manufacturers need to find new sources of growth by capturing a bigger piece of the existing pie,” wrote Web Fletcher, principal at IRI Shopper Analytics and lead author of IRI’s “Delivering Growth Through High-Value Customers” research, which was published in July.

“The top-spending households in a category spend significantly more at a retailer than the average household,” Fletcher noted. “In fact, the top-spending 20% of customers account for 55% to 65% of a retailer’s sales in virtually every category. Even among their most loyal customers, retailers consistently capture only about 50% of spending,” he noted. “This is consistent across channels — for instance, 46% in club, 52% in specialty and 54% in grocery.”

For years, retailers have been told that focusing on their best customers will bring growth. But in a low-growth (nearly no-growth) omnichannel marketplace, focusing solely on best customers is no longer enough. “In today’s omnichannel marketplace, a 360-degree view of shopper behavior is absolutely essential,” Fletcher wrote. “IRI analysis shows that as many as 20% of a retailer’s customers are the most valuable customers in the market overall, but are not the retailer’s most valuable customers,” Fletcher said. “Since the highest spenders in the market spend, on average, more than a retailer’s best customers, this miss translates into a significant lost revenue opportunity.”