Retailers adjust as consumer incomes fall

For years, mega-retailer Wal-Mart (WMT) has defined its key demographic as customers who live from paycheck to paycheck. Lucky for them, this includes roughly half of all workers, with more joining the ranks every day.

The wisdom of the Wal-Mart strategy seems to be impressing itself upon other manufacturers and retailers: as economic times get harder and paychecks get smaller, numerous companies are tailoring their stock and marketing to consumers who are flush at the beginning of the month and tapped at the end.

For example, PepsiCo (PEP) has begun promoting large, comparatively expensive "multipacks" of snacks at the beginning of the paycheck cycle, switching to smaller individual servings at the end. By following this trend, companies and retailers not only maximize the effectiveness of their marketing, but also make better use of retail space.