Companies Pivot to Higher-Income Consumers as Middle-Class Spending Drops

Apparel, accessories and cosmetics companies are focusing on higher-income consumers, Reuters reported Thursday (Feb. 5).

Companies targeting these consumers with stepped-up ad campaigns and premium products, according to the report.

Among them are Estée Lauder, which introduced new luxury price tiers and increased its marketing; Ralph Lauren, which increased its brand-building efforts; and Tapestry, which boosted its marketing spending by 40%, per the report.

The report attributed these strategies to a market that increasingly divided by income levels, with some consumers continuing to buy luxury items while others struggle with rising prices, and to the cost of tariffs, which are beginning to impact retailers after pre-tariff goods moved out of their inventories.

PYMNTS reported in May that Ralph Lauren said that it planned to raise prices to cover the cost of tariffs and that the demand it sees from its high-end consumers would support the move. Executives said during an earnings call that the company had grown its average selling price per unit every quarter for the previous eight years while also increasing its luxury and value perceptions.

It was reported in January that luxury goods makers are hoping wealthy American shoppers can buoy their business this year after sales in the sector flatlined in 2025. Those hopes are driven in part by the healthy performance of the U.S. stock market, which may translate into an uptick in spending on luxury goods.

In November, PYMNTS reported that there is a split economy, with higher-income households continuing to support travel, dining and discretionary retail, while lower-income households are focusing on groceries, necessities and debt management. The report said that while headline retail sales and credit data remained solid, there was a growing trend in which lower-income consumers were shifting where they spend their wages.

The PYMNTS Intelligence report “Financial Fragility in the Middle: How Income and History Shape Consumer Risk” found that middle-income households make up a rapidly growing share of the 70% of U.S. consumers who report living paycheck to paycheck. PYMNTS reported in September that an income range that used to signal stability now may deliver financial security that is more precarious.