Our most recent “Times & Trends” report explores the power of value and premium brands to drive growth in a recessionary economy. These segments are playing an important role within consumers’ rapidly-evolving shopping strategies, and creating new growth opportunities for CPG marketers.
Based on our research into changing consumer shopping habits, we reveal a dichotomy: sales trends are showing a rise in the sales of value brands, a lag in mid-tier brands and increasing traction across premium brands. We have dubbed this phenomenon as “The Value/ Premium Dichotomy.”
It’s not surprising to see consumers across income brackets embracing value-brand products at this time. Key staple CPG categories have seen significant price increases over the past year. Though prices have moderated, they remain well above normal. High levels of at-home meal preparation activity and tight budgets are leading consumers to turn to value brands to save money on these products and other key everyday needs.
Most interesting, however, is that even while shoppers are trading down to the value tier to keep their budgets under control, they are also trading up to a number of premium level products. For some of these upgrades, we are seeing “sophisticated splurging,” with shoppers holding on to the higher-end brands they crave but crossing channels in search of the best deal. But, we are also seeing retailers across channels stepping up innovation and marketing of high-end private label goods, going beyond the replication of premium national brands in an effort to gain customers and maximize differentiation.
Increasing traction at the premium end of the product spectrum is attributable, in part, to a growing notion that the home is once again becoming the central hub for day-to-day living. Consumers across income segments are saving money by dining and entertaining at home, preventing and treating illnesses at home and performing at-home beauty treatments more often. But, the need for indulgence remains. So, for example, some individuals are opting to consume and serve high-end alcoholic beverages from home, rather then footing a steep bill at a swanky bar. They are also purchasing premium quality hair color and beauty products for at-home beauty treatments in lieu of visiting the salon.
Changing consumer rituals continue to provide ample opportunity for CPG retailers and manufacturers to modify strategies and meet consumers eye-to-eye, offering products, packaging, pricing and promotions that are relevant, powerful and sure to meet their rapidly changing CPG needs.
We’ll continue to keep you up to date with our latest research with the confidence that these powerful insights will arm you and your company with actionable tools that will address the changing CPG market landscape during the remainder of the economic downturn and beyond.
Best,
Thom Blischok