Shrinking Middle Class, Socioeconomic Trends Among Factors Affecting Direct Selling

(Source: DSA.org)
As baby boomers near retirement, the middle class that once defined the American socioeconomic landscape is now diminishing at a rate unlike ever before—and this will no doubt have a huge impact on the approach direct selling companies will need to take with their marketing strategies.

According to a recent report commissioned by DSA from GfK Roper, only 44 percent of Americans today believe that they are part of the middle class—compared with 60 percent in the late 1970s. With the shrinking of the U.S. middle class, the resulting polarization between the “haves” and “have-nots” has expanded and brought tremendous implications for consumer attitudes, behaviors and purchasing power that are already affecting the direct sales channel.

The 98-page report, entitled “U.S. Consumer Trends Impacting the Direct Selling Industry,” offers unique in-depth analysis of the implications that recent economic, technological and social trends will have on the future of direct selling. The report breaks down key trends and statistics across five main focus areas: the future of shopping, the future of communications, future workplace trends, innovation needs and demographic and economic shifts.

“This report helps direct sellers better understand the shifts and realities that our industry faces,” said JJ LeBlanc, Senior Strategic Intelligence Analyst for Mary Kay and research advisor for the report. “Today, more than ever, underlying drivers such as the economy, technology and consumer outlook can really change consumers’ behaviors and expectations and greatly impact direct selling companies, even in a negative way. All DSA members are being impacted by these trends, so it’s important that companies better understand them in order to adjust their business models to meet future needs.”

The report also reveals that both independent direct sellers and frequent purchasers in the direct sales channel have relied heavily on the middle class in past years. As the nation’s income gap widens, many direct selling companies could face challenges in trying to retain a salesforce from—or market a product to—a population characterized by a major wealth disparity.

“Most companies have likely never seen these statistics on the U.S. consumer’s own perception of the middle class and what it means for the industry,” said Jennifer James, Vice President of GfK Roper. “Do you try to cater your products and services to the upper classes, or to the lower classes? Or, is it possible to have a strategic plan that can resonate across the entire spectrum? With the type of polarization we’re seeing in the United States, direct selling companies are already faced with many of the questions addressed in the report.”

As a valuable tool for direct selling companies, the report offers a detailed projection of how each generation will interact with the direct sales channel in the new socioeconomic environment.

“The Gen Y generation—those born from 1980 through 1992—is starting to shape a new landscape for the direct selling industry,” James said. “This generation is a want-it-all and want-it-now group. Direct selling companies are starting to realize they have to adjust their business models to cater to the needs of this next generation in order to have continued success.”

To expand on the trends and generational analysis presented in the consumer trends report, InTouch will feature a special series in coming issues that will explore why direct selling is a good fit as an income source for various generational and demographic groups including baby boomers, Gen Y, “Mom-preneurs” and more.

(Source: DSA.org)