Consumers are increasingly willing to spend more on premium products. According to Nielsen’s “Total Consumer Report,” store brand items continue to perform well, while merchandise within the premium price tier is outpacing low-cost alternatives.
“For store brands, discount offerings represent over 60 percent of revenue; however, the most value-oriented products have struggled to keep pace compared to double-digit dollar growth of premium products,” the report said. “Across branded product sales, premium tiers are sustaining more than one-third of dollar volume and are driving the most growth.”
And while the concept of self-care continues to permeate the overarching consumer mind-set, manufacturers should consider how to integrate premium products that feature sustainable ingredients and eco-friendly textiles.
This is not to suggest that store-branded products are waning in success. Instead, consumer preferences are increasingly diversified, which has resulted in heightened competition.
“Beyond any individual channel, store-branded products continue to redefine their importance to retail, and drove growth throughout 2017. Thriving at 3 percent gains in dollar sales year-over-year, sales of private-label products eclipsed $125 billion across FMCG brick-and-mortar outlets,” the report said.
Across the board, shoppers are self-educated on the variety of products, price points and advantages of specific products. Price continues to play an integral role in final purchasing decisions, but the prevalence of other factors is rising.
Consumers want more than a straightforward product. According to the report, shoppers purchase items that answer a specific demand and also speak to a larger purpose or value. “Consumers are no longer shopping just for categories themselves; they’re shopping for products that can fulfill their need and also serve a purpose,” said the report.
For example, consumers are aware of protecting against ultraviolet rays by wearing sunscreen during seasons other than summer. “Sales of sunscreen as a category declined by 2 percent in 2017 compared with 2016. Functionally, sunscreen can serve a truly useful purpose, and as an ingredient, it becomes a value-added feature to other products,” the report said. “When added to hand and body lotion, for example, the product fulfills both the consumer need for a moisturizer and also provides protection from ultraviolet (UV) light.”
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