Holiday Shopping Reveals Consumer-Spending Split

It was a holiday season of the haves and the have nots.

- NATASHA KHAN AND SARAH NASSAUER

Inflation-weary consumers were projected to splurge this year on holiday gifts, food and decorations-fueled by online purchases, according to industry estimates. But the gains were increasingly driven by higher-income households, those making more than $100,000 a year. Lower-income Americans were squeezed by higher prices for groceries, child care and other monthly expenses.

Not every retailer has navigated the turbulence well. The Container Store and Party City chains both filed for bankruptcy protection in the days before Christmas. Meanwhile, the founding family of Nordstrom clinched a deal to take the struggling department store private.

"We started to notice this trend where there was a real bifurcation in the market between the $50,000-and-below consumer in the U.S. market and the $100,000-and-above consumer," said Chris Peterson, chief executive of Newell Brands, which makes Sharpie pens, Graco strollers and Oster kitchen appliances.

For example, the company is anticipating stronger demand for its high-end blenders-those costing $100 or more and dwindling demand for its entry-level blenders that fetch $20 or less, Peterson said. The company is ditching efforts to improve its cheapest blenders and is instead focusing on enhancing its top-of-the-line items for those looking to splurge.

"As we head into next year, 100% of our innovation will be at the medium and higher price point," he said. "We're not innovating at all against the lower price points anymore."