Why Is Spending Inequality On The Rise?

In the US, spending inequality – the difference in how much households spend at grocery stores – is on the increase. Is technology to blame?

- Johan Fourie

One of the things I realised soon after marriage, is that my wife and I have different strategies when it comes to grocery shopping. I like to stock up, buying bulk on the cheap, while she prefers to visit the store more frequently, acquiring only what is necessary for the next few days. This of course means that we never run out of canned beans, but often out of milk.

Such choices are at the heart of economics. Understanding how, why and when a buyer chooses a product or service is often the difference between a thriving and failing business. That is why every successful firm, from banks to health insurance to mobile communications companies, spend considerable resources these days analysing big data to understand and “nudge” customers into behaving in a specific way.

Even general retail, a sector often caricatured as unaffected by technological change, now has to adjust to new technological possibilities, like sensing technologies that track the movement of customers as they browse a store. Technology can help retailers to optimise store layout. It can also, with a little leap of the imagination, allow for advertising that recommend new products when a new customer walks past based on the content of their previous purchases, of their existing basket or of the purchases of their friends that is connected to them on social media.