COVID-19 SERVICE: We are heightening our efforts to assist the UK retail & leisure industry through this challenging period. Explore this service now… COVID-19 SERVICE

Customer Affluence and the Wealth Effect: Strategies for Retail Growth


 5 minute read


Click here to view our eBrochure full of information on working with Retail Economics for publishing world class thought leadership research like this.


What can you learn from this report?


The "Customer Affluence and the Wealth Effect" report, developed by Retail Economics in partnership with beBettor, underscores the pivotal role of the Wealth Effect in utilising customer wealth data. This approach is essential for unlocking spending potential and tailoring marketing strategies more effectively to diverse consumer segments. The focus on the Wealth Effect highlights how fluctuations in consumer wealth directly influence purchasing power and behaviour, thereby enabling retailers to optimise their targeting for superior marketing outcomes.

Some key insights:

  • An anticipated £2.4 billion decline in retail expenditure is forecasted for 2024, attributed to the Wealth Effect.

  • A decline of 3.6% in property values from Q4 2022 to Q2 2024 is seen to affect consumer spending habits.

  • Cutting-edge algorithms are proving more efficient than postcode information in ascertaining customer wealth levels, providing accurate insights.

  • Retail enterprises can pinpoint "high affluence, low expenditure" cohorts for bespoke marketing tactics.

  • Hyper-personalisation in marketing coupled with enhancements in Customer Relationship Management (CRM) can markedly increase Average Order Values (AOV).

  • The capability to forecast a customer's Lifetime Value (LTV) from their initial purchase enhances marketing strategies significantly.

This report offers a strategic blueprint for retailers, highlighting the paramount importance of information on customer wealth in revolutionising retail approaches. This enables firms to better navigate economic challenges with greater confidence, striving for retail growth.


This report is divided into five main sections:


Section 1: The Wealth Effect

Section 2: Quantifying the Wealth Effect

Section 3: Why retailers need to understand individual customer affluence

Section 4: What retailers can do with customer affluence data






We are living in a time where the key to retail success often lies in grasping the complexities of consumer spending and wealth insights to supercharge marketing efforts.

In this dynamic landscape, top-tier brands are forging ahead to gain a deeper understanding of their customers. Using the latest in technology, AI, and growing pools of customer data, these innovators are engaging with consumers instantaneously, aiming to refine their marketing approaches with greater sophistication.

As noted by Harvard Business Review, the synergy of AI and relevant external data significantly amplifies their collective value. Customers, recognising the benefits of personalised interactions, are increasingly open to sharing their data such as age, address, profession, and hobbies etc. Yet, when revealing financial status, a natural hesitancy remains.

Nonetheless, the crucial role of customer wealth insight in elevating business strategy is becoming ever clearer. Grasping how affluence impacts consumer purchasing behavior allows retailers to enhance their marketing initiatives and performance significantly. Tailored interactions, improved product suggestions, and greater relevancy are among the strategic benefits to help companies expand their market presence.

Against the backdrop of an improving yet fragile economy, marked by falling inflation in 2024, retailers face the dual challenge of high interest rates and geopolitical instability. Fortunately, retailers now have unprecedented access to detailed, often localised, data sets.

Despite this, numerous businesses have yet to advance beyond elementary applications of this data, relying on sporadic analyses of basic customer information like birthdays and general postcode areas. Such methods miss the deeper insights found in more specific data points, like exact residential locations. Thus, the potential of blending detailed customer data with established transactional records is a largely untapped opportunity for many within the industry.

This report explores the 'Wealth Effect' and how fluctuating wealth and individual life changes shapes customer spending patterns, presenting a compelling argument for the necessity of individual customer wealth insight today. The report not only provides a guide for retail brands to decipher customer wealth, but also explains how customer wealth insight can be integrated into actionable strategies. With these innovative insights, brands are poised to forge unprecedented connections with their customer base.



The research features four key sections:

1. The Wealth Effect: Introduces the concept of the ‘Wealth Effect’ and associated factors.

2. Quantifying the Wealth Effect: Gives an estimate for the impact of the Wealth Effect in the current UK economic climate.

3. Why retailers need to understand individual customer affluence: Underscores the importance of comprehending consumer wealth in the context of unequally distributed income.

4. What retailers can do with customer affluence data:  Offers different use cases of customer affluence insights to help improve business strategies.




 Section 1: The Wealth Effect

This section offers an expanded view of consumer affluence and explains the ‘Wealth Effect’. It covers the fundamental economic theory and examines both the associated positive and negative effects.


Understanding first principals

Economic theory suggests that personal expenditure, or consumption, is influenced by five primary factors. This is encapsulated in the ‘Consumption Function’, expressed as “C = a + bY + dW” (Fig. 1). Essentially, this formula posits that your total outlay is a mix of your necessary expenditures, coupled with a proportion of your earnings and your assets. This model is a tool for economists to forecast societal spending trends in response to economic shifts, such as salary hikes or amendments in taxation. Individuals with ample income and assets are likely to increase their spending, whereas those with limited means may confine their purchases to essentials.


Fig 1: Understanding the basics of consumer spending/consumption

The Consumption Equation


Total spending (consumption) is the sum of your essential spending, plus a portion of your income, plus a portion of your wealth


What is the 'Wealth Effect'?

The Wealth Effect is an economic concept that revolves around behaviour, indicating that people are likely to spend more as the value of their assets (e.g. property and savings) increases. This effect is predicated on the idea that asset appreciation boosts consumer confidence and their propensity spend on goods and services.

Wealth Effects can be either positive or negative. Positive Wealth Effects fuel economic growth by increasing consumer spending, which in turn drives demand for products and services, benefiting businesses and the economy at large. On the other hand, negative effects can have the opposite impact. For instance, the economic surge in the UK during the late 1980s, driven by positive Wealth Effects, was followed by a recession in the early 1990s, worsened by negative Wealth Effects.

Understaning this in context of what's happening in today's economic environment is critical for.....


Complete the form at the top of this page now to access the rest of section one!



Section 2: Quantifying the Wealth Effect

In section 2 we estimate the impact of the Wealth Effect in relation to present economic conditions.

Traditional economic models and established practices that guide central bank policies led to an increase in interest rates, a response to the inflation surge of 2022. This adjustment adheres to the widely recognised principle that the effects of monetary policies unfold gradually over time, not instantaneously.

It is estimated that the full impact of such changes permeates the 'real' economy after a delay of about two years. This delay in the effects of monetary policy is partly due to the Wealth Effect. In essence, declining property values (which represent a major asset base for most households) undermine financial security for many, prompting them to increase savings and reduce expenditure while also facing tighter credit conditions.

Although interest rate changes take time to impact consumers, historical data demonstrates a close correlation between house price movements and consumer spending over the last half-century (Fig. 3).

Also, the influence of interest rates on the housing market is expected to intensify over time. Even though the cycle of rate hikes may have reached its height, asset valuations and household finances will likely keep adjusting, with the resultant drop in spending persisting into the future. Notably, from Q4 2022 to Q2 2024, average house prices have decreased by 3.6% (Fig. 4), with sharper declines in regions like London (-5.5%) and the South East (-4.5%) (Fig. 5). These reductions have eroded consumer confidence, heightened financial stress, and triggered a negative wealth effect, leading to diminished spending.


Fig 3: History shows that house prices and consumer spending tend to move together

House prices vs consumer spend

Source: ONS, Nationwide House Price Index – seasonally adjusted.


Due to the impact of the Wealth Effect, we estimate that the retail industry will experience a reduction in spending of around £2.4 billion in 2024 as past rises in interest rates bite.


For comparison £2.4 billion is about the total annual turnover of IKEA in the UK.*

The reduction in spending is likely to land unevenly across households, with the impact of rising interest rates and weaker asset prices capturing a wider pool of middle and high income households. Indeed, many millennials (28-43 years old) have only experienced home ownership during a period of ultralow interest rates and are...

Complete the form at the top of this page now to access the rest of section two!



Section 3: Why retailers need to understand individual customer affluence

In this section, we underscore the critical need for retail brands to deepen their understanding of customer affluence, which is essential for enhancing the sophistication of their marketing strategies and boosting sales growth.


The importance of understanding customer affluence

Businesses that recognise variations in their customers' financial situations can significantly benefit by customising their offerings and marketing strategies. This includes five key considerations:


Customer Profitability

For many retail brands, aiming for customer profitability typically involves concentrating on their most lucrative customer segments. This traditional approach, however, tends to rely solely on historical spending data and fails to consider customer affluence and the latent spending potential of each individual. Adopting innovative methods can significantly enhance this strategy.


Customer Lifetime Value

Typically, the calculation of Customer Lifetime Value (CLV) does not take into account customer affluence when assessing potential customer performance. Rather, these methods predominantly use historical transaction data, which can provide a restricted view. Instead, retailers can...



Complete the form at the top of this page now to discover the other three key issues



Customer affluence scores

Despite a challenging macroeconomic environment, retailers can utilise individual customer affluence scores, such as those provided by beBettor and similar providers, to uncover growth opportunities and enhance resilience. By strategically employing these scores, businesses can customise their products, marketing efforts, and customer interactions to align with the specific financial capacities and preferences of various affluence segments. This focused approach maximises the impact of each customer interaction, boosts sales, fosters loyalty, and secures a competitive edge, even amid potential economic challenges.


Affluence is highly unequally distributed in the UK economy

Income and wealth distribution is marked by inequality across global economies, and the UK is no different. His Majesty’s Revenue & Customs provides intricate personal income data for the UK's 32 million taxpayers. This data reveals an average (mean) personal income of £37,300, compared to a median (middle) income of £26,300, illustrating a 42% disparity and underscoring the significant income inequality prevalent within the economy (Fig. 6).


Fig 6: Percentile points of total income before tax

Source: HMRC



Advances in data localisation

The UK's 24.8 million households are distributed across approximately 1.8 million postcodes, a system that was fully established only in 1974. Public access to property prices began in 1995, revealing details such as the owners' names and any mortgages registered against these properties. From the 2001 Census onward—of which there have been only two, with just one fully reported—the Office for National Statistics has implemented a highly detailed system for data classification, which includes:

• England & Wales (2)

• Counties (48)

• Councils (340)

• Parliamentary constituencies (575)

• Middle layer Super Output Areas (7,264)

• Parishes (11,358)

• Lower layer Super Output Areas (35,672)

• Output Areas (188,000)

• Postcodes (1,800,000)

• Households (25,600,000)

• Unique Property Reference Numbers (42,800,000)


These comprehensive measures have, for the first time, enabled the precise personalisation of affluence data on an almost individual basis. This can significantly help retail brands where they can...


Complete the form at the top of this page now to access the rest of section three!




Section 4: What retailers can do with customer affluence data


As the global economy progresses and consumer behaviours evolve, successful retail brands must continually adapt, gaining new insights and facing emerging challenges head-on. Currently, amidst industry upheavals and a rising cost-of-living, the ability to understand individual customer affluence has become vital for crafting effective retail strategies. In this concluding section, we explore the potential applications of customer affluence data.

By considering the following strategic points, retail brands can cultivate an environment that is inclusive, responsive, and attractive to consumers across all wealth levels, thereby promoting growth, building loyalty, and enhancing resilience in a constantly shifting economic landscape. This research outlines six critical areas of focus for retail brands:


1. Identify ‘hidden’ spending power within your existing customer base

Retailers equipped with insights into their customer affluence can strategically identify pockets of ‘hidden’ spending power within their existing customer base (e.g. ‘high affluence, low spend’ customer groups with significant wealth but modest spending habits).

By fusing such customer affluence insights with behavioural data and transaction histories, retailers can better target these ‘golden cohorts’. This identification enables them to...


Complete the form at the top of this page now to access the other five areas for action!




The enhanced granularity of recently available data has now reached a stage where specialist firms, equipped with advanced data science capabilities, are able to precisely estimate individual customer affluence for the first time, enabling retail brands to use this information profitably.

This precision provides a substantial competitive edge, supercharging the customer analytics function and amplifying marketing effectiveness. Coupled with the latest advancements in Generative AI, this synergy unlocks significant revenue opportunities for early adopters—each 1 percent improvement in retail sales effectiveness across the UK could equate to the annual revenue of Next Plc.

Moreover, the ‘Wealth Effect’ remains a formidable influence in consumer spending within the retail sector, poised to exert a negative impact over the coming two years. However, retailers that harness and integrate the newest data sources will be in a prime position to discover and capitalise on hidden affluent segments, potentially outperforming their rivals.

In conclusion, retail brands that effectively utilise affluence insights and integrate this data into their strategies can significantly boost customer satisfaction and more adeptly adjust to evolving economic circumstances. By focusing on personalisation, refining pricing and promotional tactics, fine-tuning inventory management, and adopting data-led decision-making, retailers are well-equipped to navigate the increasingly complex economic environment expected in 2024 and beyond.



Download: Customer Affluence and the Wealth Effect: Strategies for Retail Growth report

*All fields required

By clicking 'Download now' you consent to sharing your details with the authors of this report.

Find out more about our complete end-to-end thought leadership service

Discover our proven five step process & avoid the complex multi party approach

  • Say something new & insightful
  • Use our extensive experience to inject real industry value
  • Get maximum engagement from our media networks
  • Develop an authoritative voice within UK retail
  • Be seen as an industry leader!




About this report

This "Customer Affluence and the Wealth Effect" report is brought to you by Retail Economics in collaboration with beBettor, offering a deep dive into the pivotal role of consumer affluence within the retail landscape. The insights within this report are indispensable for professionals across the retail and related industries, serving as a cornerstone for enhancing strategic planning, refining forecasts, and navigating the complexities of ongoing disruptions and structural changes within the sector.

To equip your business with the knowledge to thrive in an ever-evolving economic environment, secure your free copy of this report today by completing the form at the top of this page.


Other popular thought leadership reports

Net Zero commitments of brands and retailers


The Path to Net Zero - The future of the retail industry

This report evaluates net zero efforts of the top 200 retailers/brands with DTC operations in global markets.
Outlook for the UK Retail & Consumer Industry 2024 - Retail Economics


Retail and Leisure Outlook Report 2024

Learn about the Outlook for UK Retail & Leisure in 2024: With insights to help businesses thrive in a complex landscape
Report about new customer journeys, the importance of omnichannel & the role of delivery/logistics - Retail Economics


Ecommerce Delivery Benchmark Report 2024

Explore the intricacies of new customer journeys, the importance of omnichannel & the role of delivery/logistics.
The Psychology of Recommerce


Second-Hand, First Choice: The Psychology of Recommerce

Discover key industry and consumer insights and strategies for businesses to implement as recommerce continues to evolve
The Cost of Retail Theft


The Cost of Retail Crime: Financial Impacts & Mitigation Strategies

Discover the motivations behind employee retail theft and strategies to minimise theft within the workplace
Digital Wallets in Retail


From Plastic to Pixels: Navigating Shifts in Consumer Payment Preferences

A look into the trajectory for digital wallets across UK retail, leisure & hospitality + strategic considerations
Peak Trading Season Report


Peak Season Report 2023: Building a risk-resistant ecommerce strategy

Discover what Christmas 2023 has in store for retail and how consumer behaviours will affect it + strategies for success
New Age of Digital Transformation


Retail at Inflection Point: A New age of Digital Transformation

Discover the impact of digital sophistication on financial indicators inc. sales growth, profitability & valuation
The cut back economy a widening crisis within the retail industry


The Cut Back Economy 2023: A Widening Crisis

Part 2 of our Cut Back Economy series, this report identifies opportunities & risks to navigate the cut back economy
Consumer and Retail Trends in 2023


Taking Stock - UK Retail & Consumer Trends

Learn what 2023 holds in store for UK retail and consumers & discover key trends to look out for in 2023 and beyond.
Top 10 European Retail Markets


Top 10 European Retail Markets: In-store & Online Spending Data (2013-2022)

Data and Insights on the Top 10 European Retail Markets consolidated into one report
Personalisation Pays Reshaping Retail


Personalisation Pays: How Data-Driven Strategies are Reshaping Retail

Discover how data-driven strategies are changing retail as we know it and how personalisation can help businesses thrive
The Bottled Water Industry


An Economic and Environmental Case for Acting Against Bottled Water Packaging, Labelling and Marketing in the UK

Discover the economic and environmental case against bottled water packaging in the UK. Take a stand for a sustainable future.
Battling Basket Abandonment - GFS & Retail Economics


Battling Basket Abandonment: Mastering Delivery Choice & Convenience

Discover more information about why consumers abandon their online shopping baskets and how to reduce these abandonments
Outlook for the UK Retail & Consumer Industry 2023 - Retail Economics


Outlook for UK Retail & Consumer 2023

Learn about the Outlook for UK Retail & Consumer in 2023: Cost of living impact on consumer behaviour & retail brands.
The Future of Retail Property Preview Report - Retail Economics


The Future of Retail Property

Check out the Future of Retail Property preview report. Full access available to Retail Property Members only.
40 future retail trends to 2030 - Retail Economics


40 Future Retail Trends to 2030

Discover the top 40 retail trends shaping the future towards 2030: a great resource to help future-proof your business
Retail insight report on consumer shopping behaviour online vs. in-store


UK Omnichannel Retail 2023: Understanding Consumer Segmentation for In-store & Online Markets

Find out where shoppers are spending: online vs. in-store for key retail categories + impact of age, income & workplace.
Report about the impact of inflation & changing consumer behaviour on the retail sector - Retail Economics


Ecommerce Delivery Benchmark Report 2023: Impact of inflation & consumer behaviour on online retail

Learn about the impact of inflation & changing consumer behaviour on the retail sector: spot opportunities & challenges.
The Future of the EU Apparel Industry Business Models  Profitability Retail Economics


The Future of the European Apparel Industry: Business Models & the Profitability Paradox

This report looks at the future of the apparel industry & how business models are adapting to profitability concerns.
Christmas 2022 Retail Sales: Holiday Shopping Trends Report - Retail Economics


Christmas 2022 Retail Prospects: Holiday Shopping Trends Report

Christmas 2022 retail sales prospects? This report assesses performances across peak trading in ‘cost of living’ crisis.
uk pensions report - retail economics


Understanding Pensions in an Era of Disruption

Discover how much savings & income you need for retirement & the shortfall between current pension pot values & income.
Changing consumer and shopper values in retail


Changing Consumer Values & Behaviour: Building a Competitive Proposition in Retail

Consumer behaviour across Europe is changing in response to industry disruption & the cost of living crisis - see how.
The cut back economy cost of living crisis retail economics


The Cut Back Economy & Cost of Living Crisis

Explore the key drivers & impacts of the cost of living crisis on UK retail & what brands can do to mitigate its effects
The apparel market Five key trends to 2025


The Apparel Market: Five Key Trends to 2025

Learn about the five key industry trends that will shape the apparel sector towards 2025 (clothing & footwear).
The Retail Experience Economy 2.0 report - How Consumers value experiences in times of crisis - Retail Economics


The Retail Experience Economy 2.0

Find out how the experience economy is being impacted by the cost of living crisis & many other factors.
Top five strategies for retailers and brands to combat rising inflation and operating costs - Retail Economics report


Top 5 strategies for retailers & brands to combat rising inflation & operating costs

Discover our top 5 strategies for retailers & brands to help combat rising inflation & operating costs.
The Big Squeeze Report pressure on consumer finances and rising inflation - Retail Economics


The Big Squeeze: Pressure on consumer finances, rising inflation & money management

Discover the 4 financial personas of consumer spending & how rising inflation & household bills are impacting behaviour
Impact of the metaverse on the retail industry sector - Retail Economics


Impact of the metaverse on the retail industry

Is the metaverse going to be the next big thing? Download our report to find out what retailers should be thinking about & how customer journeys could change.
Ecommerce Delivery Benchmark Report 2022 - Retail Economics - Metapack


The Future of Online Delivery for the Retail Industry

Discover the impact of the ongoing shift to online retail within key European markets & how it's affecting consumer behaviour & retailer's operations.
Future of European Apparel Industry - Evolution of Stores - Retail Economics


Future of European Apparel Industry: Evolution of Stores

See where the future of the European apparel industry is heading & how physical stores & their purpose is fast evolving.
Outlook for UK Retail & Consumer Industry 2022 - Retail Economics


Outlook for the UK Retail & Consumer Industry 2022

Get your free Outlook for UK Retail 2022 report: economic outlook, forecasts, Covid-19 impacts, online, supply chains...
Covid-19 and the Future of UK takeaway industry - Retail Economics


Covid-19 and the Future of Takeaway

This report looks into the valuable economic, social and cultural contribution made by the UK takeaway sector in 2020.
UK Food and Grocery Market Retail Trends to 2025 - Retail Economics


The UK Grocery Market: Five Key Trends to 2025

This report explores five emerging retail trends in the Food & Grocery sector towards 2025 (consumer behaviour, online).
The True Cost of Online Retail - Retail Economics


The True Cost of Online Retail

This research looks at the online retail channel & investigates the real operating costs & profit margins for retailers.
Outlook for UK Retail 2021 - Ten retail trends - Retail Economics


Outlook for UK Retail and Leisure 2021

This report looks at challenges facing UK retail in 2021 in context of Covid-19 & other key structural changes unfolding.
Covid-19 and the Future of Retail Supply Chains - Retail Economics


Covid-19 and the Future of Retail Supply Chains

This report explores retail supply chain networks & key disruptive factors: Covid-19, security, labour, technology, ESG etc.
Connected digital retail customer journey - Retail Economics


The Connected Retail Customer Journey and Digitalisation

Explore the connected retail customer journey & the importance of digital as online engagement soars in this current era.
Retail Customer Journey Fashion Apparel Industry - Retail Economics


Understanding the retail customer journey for the fashion industry

Discover insight into the retail fashion customer journey (stage 1) - consumers first interact with retailers & brands.
Brexit disruption Food & Grocery - Retail Economics


Structural Changes for UK Food & Grocery Sector

In a pre-Covid era, this research report looks at consumer behaviour & the impact of Brexit on how consumers shop for Food.
Economic Outlook for UK Retail and Impact of Covid-19 - Retail Economics


Economic Outlook for the UK Retail Industry and the Impact of Covid-19

Explore the outlook for the UK retail sector & 5 underlying trends that will reshape the industry from Covid-19 impacts.
Consumers and the New Normal - Exploring Covid-19 impact on EU retail


Consumers and the New Normal: Exploring the impact of the coronavirus on European retail

What is the 'new normal' going to look like for retail in the EU? This report examines this in detail & offers insight.
Contribution of the UK takeaway market to the economy - Retail Economics


The Contribution of the Takeaway Market to the UK Economy

How does the UK takeaway industry impact the UK economy? This report looks at the valuable economic & social contribution.
Retail Cash Crunch Impact of Covid-19 - Retail Economics


The Retail Cash Crunch: The Impact of COVID-19 on Major Non-Food UK Retailers

How long can UK retailers' cash reserves last? This report looks at Covid-19 impacts, consumer behaviour & profit margins.
Whats happening to retail property?


What's happening to Retail Property?

Exploring the contributing factors of how physical retail property is changing: rise of online, shopper behaviour & more.
Impact of Artificial Intelligence (AI) on the UK retail industry - Retail Economics


The impact of AI on the UK retail industry

A look into how artificial intelligence (AI) is impacting the UK retail industry, at all stages of the customer journey.
Future of online retail in the UK  - Retail Economics


The Digital Tipping Point: 2019 Retail Report

Unearths insights into causative forces driving digital customer journeys & reveals differences across consumer segments.
Impact of Covid-19 on UK retail industry - Retail Economics


Impact of the Coronavirus on Retailers

This report explores the impact of the initial stages of Covid-19 on the UK retail & leisure industry back in March 2020.
Outlook for UK Retail 2020 - Retail Economics


2020 UK Retail and Leisure Outlook

The outlook for the UK retail industry 2020 from a pre-Covid-19 perspective. Research, commentary & analysis of factors.
Outlook for UK retail 2019 - Retail Economics


Retail Economics/RBS Outlook for UK Retail 2019

Find out what's in store for UK retail in 2019 & beyond. Discover current factors affecting retailer and consumer alike.
The Retail Experience Economy - The Behavioural Revolution - Retail Economics


The Retail Experience Economy: The Behavioural Revolution

This work explores four realms of retail experiences that have been quantified & discusses their impact shopper behaviour.