Death of 'Mass Affluent' Remakes All of Retail

BOSTON (MainStreet) -- There's a lot of talk about the polarization of wealth and the shrinking of the "middle class." A sea change for companies as they market, brand and advertise has more to do with the fate of the "Mass Affluent."

A recent study by Digitas, a global integrated brand agency, found that those with a $100,000 to $199,000 household income level have all but disappeared.

"They don't have the leveraged spending power they once had and now have to live on income alone," the study says, adding that 53% of this once-dominant demographic now considers themselves middle class.

The study, Affluence in America: The New Consumer Landscape, was developed as a white paper for Advertising Age with Ipsos Mendelsohn, a global market research company that specializes in advertising and marketing. Mass affluence has given way to the spending power of the truly and the up-and-coming affluent -- the "Class Affluent" and "Emerging Affluent," it found.

The Mass Affluent, earning between $100,000 and $199,000 in household income, is rapidly being absorbed into other categories, including the Emerging Affluent, or those under the age of 35 earning $100,000 to $199,000; the Class Affluent, a growing segment with between $200,000 and $1 million HHI annually; the merely "Affluent," with between $200,000 and $499,000 HHI; the "Wealthy," with between $499,000 and $999,000 HHI; and the "Rich," with $1 million-plus HHI.

"I believe they the Mass Affluent were always middle class but they were able to live above their income or their mean through leverage," says George Scribner, senior vice president of people planning for Digitas and the author of the study. "We are hearing ad nauseum today about how the typical middle-class, organized-labor careers -- teachers and government workers and social services, those kinds of jobs -- are either diminishing or have very limited upside potential. Shrinking jobs and limited income potential means the Mass Affluent are back to being middle class and they themselves are most likely to define themselves as middle class. The shift in assets continues to go to what we are calling the Class Affluent, the 8.5 million adults who have truly affluent lifestyles according to all the data we have looked at."

Where one falls on the wealth spectrum has traditionally influenced what they buy and the brands they favor.

According to Scribner, the Mass Affluent had grown in size and importance since the 1970s to become the highest tier of the mass market. He credits the trend for influencing "companies like Wal-Mart (Stock Quote: WMT) to creep upwards into organics, Starbucks (Stock Quote: SBUX) to make the $3 latte an everyday occurrence and Mercedes to create the C-class to stretch into a lower price point and larger customer base."