Should Retail Target Middle Class?

The following appeared in the opinion column of a financial magazine:

“On average, middle-aged consumers devote 39 percent of their retail expenditure to department store products and services, while for younger consumers the average is only 25 percent. Since the number of middle-aged people will increase dramatically within the next decade, department stores can expect retail sales to increase significantly during that period. Furthermore, to take advantage of the trend, these stores should begin to replace some of those products intended to attract the younger consumer with products intended to attract the middle-aged consumer.”

Discuss how well reasoned . . . etc.

The whole approach is reasonable on the whole. The writer puts forward some statistics to argue that over the next few years the company should target a specific segment of the market, namely the middle-aged people. This makes sense as a focused approach would benefit the whole company and it will be able to take advantage of an emerging trend. It is reasonable to assume that as people age they tend to start a family which entails a higher retail spending. If they constitute a major part of the population, it is reasonable to focus on them in order to take advantage of the situation.

However there are some key aspects that can undermine this reasoning. The first aspect would be the amount spent by each age group. 25% of a bigger number can be greater than 39% of a smaller one. So even if the younger people spend 25% but have more disposable income, they can be a better segment to target. Another aspect is the number of children in the population. The statistics suggest that the number of young people in the current scenario is much higher than the middle aged people but it should also be much higher than the number of children. Only then in the next decade middle aged group can be the most significant and influential group. 

Finally I do not agree completely with the last part of the reasoning. I agree that the company should start developing products for the middle class and introduce them slowly. This will help in building a brand image as a company with best products for middle aged people. Within a decade it is possible for the company to be well entrenched as the market leader. This will help it achieve the intended goals. However I do not agree that this should be done by immediately replacing the products targeting younger people. One should not forget that the middle-aged people of tomorrow are still young today. The best time to build their brand loyalty would be today and not tomorrow. If the company remembers this and keeps at least some well thought products for youngsters, it may help its cause in the long run.