design:retail - November/December 2017 - 32

032

shopping with paco

The Math of Modern
American Retail

PACO UNDERHILL
CEO & FOUNDER
ENVIROSELL

p.underhill@envirosell.com

HE U.S. TREASURY department announced earlier
this year that, for the first
time in almost a decade,
the median annual family
income had increased to more than
$59,000. It is hard for us who live in
New York, San Francisco, Atlanta or
much less Columbus, Ohio, to understand the economics of mainstream
America. We can understand poverty,
we witness homelessness, but the
math of how a typical middle-class
family of four lives on a take-home
paycheck of less than $5,000 a month
is telling.
That salary is gross, meaning before taxes-
federal, state, local-and probably some shared
healthcare costs. We can assume the actual takehome is just north of $4,500 a month. The old
20th-century measure is that 25 percent of posttax income is spent on housing. In 2017, how
much home do you get for $1,000 a month, much
less a mortgage? Cell phone bill for two adults is
$150; utilities another $100. Transportation costs
between car payments, insurance, gas and maintenance: $300. Clothing and groceries, cable TV or at
best Netflix-even more. Disposable family income
is less than $2,000 per month. That is for goods,
clothing and discretionary services. Realistically,
the figure is half that.
Are they going to be shopping at the new
Nordstrom? Is Bonobos up on the their radar
screen? Rent the Runway is part of the context
of a television show, and fine dining is limited to
Chick-fil-A. Sam's and Costco are not practical,
they don't have the cash and they tend to buy what
they need for the week, not for the month. The
family credit card is guarded and rather than a tool
for budgeting, has been subject to abuse issues.
Should we feel sorrow for them? The answer is
NOVEMBER/DECEMBER 2017

DESIGNRETAILONLINE.COM

no. This is a middle-class family with two working
adults living in a small town. They go to church,
parent-teacher meetings and care for their children.
They have pride and dignity. The question for us is
how do we in the retail industry relate to them?
They might have an Amazon account, but they
are not in a position to get deliveries at home
during the day because both Mom and Dad are
working. Nor are they able to get deliveries at work.
Mom is an aide in a daycare center, and dad works
on a road crew for the county. Their money is carefully spent. The dollar store comes first, before
they go to Walmart-the deals are better and the
Dollar/99 Cent/Ollie's channel is increasingly
stocking grocery items and, in some cases, produce. If they are lucky, they have an ALDI nearby.
There is no shame going to a Goodwill. Flea
markets, church sales and consignment stores are
cherry-picking opportunities. Vintage is the new
word for used, and there is no shortage of bargains.
Digital literacy is mixed. The teen in the house is
consulted, but a certain level of computer access is
at the public library, or if the kid is lucky, in a computer center at the local public school. Yes, some
pre-shopping may be done online. But for the kids,
GLOBALSHOP.ORG

smartphones are recycled from their
parents and are used for family communication and for gaming.
In small-town America, Main Street
is challenged. Cafés, bars, antique
stores, ethnic groceries and small business services-accountants, real estate
brokers and lawyers-have moved into
the storefronts. There are independent
merchants trying to make a go of it. With
rents down, they can afford the risk. The
mall is at best a B Level, with a 30 percent
or higher vacancy rate. The anchor
spaces are occupied by the 20th-century
giants on life support: K-Marts, Sears
and sometimes a regional department
store. Payless Shoe Source and other mainstays are
going or gone. H&M and Century 21 are fast-fashion
brands that are urban-based. In mainstream America, fashion tends to be local, not global. Jeans and
boots. Tees and sweats. Sneakers and flip-flops.
Small-town America is caught between the digital revolution, which is global but still dependent on
bandwidth and credit cards, and the painful truth
that fewer and fewer families have benefited from
that revolution. In a country where significant pieces of our infrastructure are crumbling, are we going
to jump from the 20th to 22nd century and just leave
all this behind? Shopping remains part of the DNA
of our species. Part of the DNA is also shop-keeping.
The tools of modern visual merchandising and
store design are all subject to the triumph of creativity over budget. From Williamsburg, Brooklyn, to
Susanville in northern California, the small merchant is trying hard to be relevant to the $59,000
family. How about us?
PACO UNDERHILL IS THE FOUNDER OF ENVIROSELL AND AUTHOR OF
THE BOOKS "WHY WE BUY" AND "WHAT WOMEN WANT." HE SHARES
HIS RETAIL AND CONSUMER INSIGHTS WITH DESIGN:RETAIL IN THIS
BI-ISSUE COLUMN.

Photo by PACO UNDERHILL

http://www.DESIGNRETAILONLINE.COM http://www.GLOBALSHOP.ORG

Table of Contents for the Digital Edition of design:retail - November/December 2017