The trend: As many consumers struggle with cost-of-living pressures, companies are retooling their strategies to gain spending from higher-income customers who are more resilient to economic stress.

• Airlines like Delta, United, and American are expanding premium seats and service while shrinking economy cabins to monetize affluent demand.
• Major coastal and Sun Belt cities are building housing at above-average rates, but supply skews toward larger homes and high-end rentals rather than affordable options, per a study from the Georgetown University Center on Poverty and Inequality.
• Major automakers have shifted production toward higher-margin, more expensive models, discontinuing entry-level vehicles and leaving fewer budget options.

A split economy: Across industries, businesses are reorienting goods toward people who are still spending, reflecting a growing concentration of spending power among top earners.

The top 20% of US income earners now account for 59% of spending, according to a Moody’s Analytics analysis of Federal Reserve data cited by Axios. Just 41% of spending comes from the bottom 80% of income earners.

That divide is playing out amid a sluggish labor market. Private employers added just 22,000 jobs in January, per ADP, with growth coming almost entirely in health care and education.

Mass-market merchants are responding with two-tier strategies, courting higher-income shoppers while using discounts to attract price-sensitive customers.

• Fast-food chains like McDonald’s are offering upgraded chicken sandwiches and other premium items alongside expanded value menus.
• Walmart has said it is gaining share among higher-income households after upgrading assortments in categories like apparel and electronics, even as it keeps its value focus.
• Even discounters like Five Below are moving up the price continuum and stocking items like $20 bedroom mirrors, in part to offset tariffs, The Wall Street Journal reported.

Implications for brands: It’s understandable that companies are focusing on higher-income consumers who are less sensitive to inflation as middle- and lower-income households pull back on spending. These customers offer opportunities for loyalty and profit growth.

Still, neglecting less-affluent consumers risks shrinking the long-term customer base and slowing overall demand. Smart brands will hedge—leaning into affluent segments now while staying visible and accessible to lower-income consumers ahead of better times.

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