$90 cream and $10 toothpaste: Companies target big spenders

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“If you want to hedge against the economic challenges, you hedge your bets by chasing after the upper income,” said Marshal Cohen, chief industry adviser at market research firm Circana.

Companies from toothpaste makers to even discounters are adding more premium items like designer body creams and services as they reach out to wealthier shoppers who are still spending freely even in the face of higher inflation and a volatile economic environment.Retailers and consumer product companies felt justified in raising prices to offset higher costs from gnarled supply chains and Russia’s war in Ukraine last year.

Meanwhile, Five Below — a chain known for selling toys and other impulse items for $5 and below — is creating a new store-within-a-store prototype: Five Beyond, which sells items at $6 and higher. Last year, the Philadelphia chain converted 250 of its 1,300 stores to include its higher-priced section and plans to expand that conversion to another 400 stores this year.

“We made the decision not to go chasing people with discounts,” Niccol said. “That’s not what our brand is and that’s not what we’re going to do.” When AMC Entertainment, the world’s largest cinema chain, announced in February it was rolling out a new three-tier pricing system at all its locations by year end that would require customers to pay more for better seats, actor Elijah Wood — best known for his portrayal of Frodo Baggins in “The Lord of the Rings” film trilogy — blasted the move on Twitter.

Low and middle-income shoppers have also been hurt by the Federal Reserve's inflation-fighting campaign to hike interest rates that have made using a credit card or getting an auto loan more expensive. But the Fed's efforts could be easing as, while consumer spending rose modestly, according to reports by the Commerce Department released Friday.

 

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