Income inequality: an existential crisis in the consumer goods industry

Income inequality is a crisis that has been building for many years. It threatens the very existence of consumer-focused companies by undermining the buying power of their core consumer base: the middle class.

At a glance

• In the last 20-30 years, consumers in the lower- to middle-classes in developed markets have seen virtually no increase in household incomes.
• Those in the middle are likely to change stores, buy less, or switch to lower-priced products.
• To learn how retailers are confronting these challenges, we visited nearly 40 stores – discounters, mainstream retailers, and convenience stores – in different income zones in London, Boston, Frankfurt, and Mumbai.
• We found that almost none of these stores rigorously tailored their assortments around local economic conditions.
• Given the challenges ahead, consumer businesses cannot simply tweak their product offerings. They must understand store surroundings and build models that can adapt accordingly.