The global consumer is stressed out, but that seems to be triggering a bit of retail therapy — on higher-priced goods, according to the latest insights from Nielsen.
From a consumer behavior and spending perspective, it’s been rocky as of late: Brexit, U.S. presidential campaigning antics and the holidays have introduced new stimuli for spending. In the face of an uncertain future and in search of a feel-good fix, shoppers are opting for premium products, according to Nielsen’s recent “Moving Up” December 2016 report — which reveals that consumers are trading up as values shift from quantity to quality.
The study was based on retail sales data derived from Nielsen’s retail measurement services that captures sales and price data from major retailers. The survey based its findings on responses from 30,000 participants who have online access in 63 countries. The study notes that the conclusions are based on self-reported behavior.
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Though a generational divide exists between what Millennials and Baby Boomers merit as a premium label, both demographics are making relatively small upgrades for everyday products that are leading to high sales growth in certain markets. In the U.S., the study states that both personal-care items and food each amounted for eight percent premium sales growth accounting for 26 percent and nine percent of premium share of category sales over a two-year period.
Beverage and home care trailed behind with seven percent and two percent sales growth, respectively. This would be a good time to review home products listings or perhaps expansion into new markets — if an organic opportunity aligns with consumer demands.
In southeast Asia, home-care items sales thrived — accruing 34 percent sales growth over a two-year period, the report said. Personal care was right behind, securing 22 percent sales growth. In Europe, the sales of shampoo rose nine percent year-on-year — sweet biscuits and soft drinks sales increased four and two percent, respectively.
Though quality and performance were highly rated characteristics in considering products as premium, other factors contributed — predominately how the purchase of certain items might reflect on their status and improve self-confidence. According to the study this was notably the case mostly in developing countries such as India, China and Africa/Middle East. Fifty-two percent of global consumers revealed that buying a premium product makes them feel good — 50 percent admitted that these purchases make them feel more confident, the study said. A symptom of the social media effect perhaps is represented in the 43 percent of survey participants sharing that buying premium products prove that they have good taste.
Brands and retailers would be well-suited to consider user-friendly social sharing opportunities for customers to promote new purchases and marketing strategies to showcase indulgent characteristics of products.
Consumers in the Asia-Pacific referred to products to enhance self-confidence and perceived status the most out of all international markets. Sixty-three percent of these consumers shared in the survey that buying premium upped their confidence — 52 percent said that buying premium goods showed others that they were successful.
Across the board, Millennials’ premium purchases were more emotionally informed than Baby Boomers. Fifty-nine percent of the younger demographic revealed that these purchases made them feel good, compared to 37 percent of the elder.
Brand ethos and eco-friendly products are finding their way into luxury-item standing among consumers. The study shared that 48 percent of global consumers are highly willing to spend more on products that come with quality standards. Forty-two percent shared that they’d spend extra on items that contained organic or all-natural ingredients — 39 percent would do the same for eco-friendly goods.
This marks a huge opportunity for both entertainment or food and beverage sectors, and also beauty. It may be time for companies to amp up their ingredient listings for higher pay-offs.