Will consumers ‘upgrade’ when they money starts to flow again?
We are starting to take the first few hesitant steps towards recovery, house prices continue to move in an upward direction and the pound gaining ground against the dollar and Euro. But what does this mean for retailers that have seen a boom in business as consumers ‘trade down’ to save money?
Although, some consumers will shift away from value products as they begin to feel more confident, a large proportion will remain loyal to lower cost products and retailers.
Recent comments on bbc.co.uk regarding the grocery sector show that many consumers have had a total lifestyle change with regards to the food they eat and prepare, one that most state will continue regardless of any changes in the economy.
Often the hardest task of any retailer or manufacturer is getting consumers to take a risk and trial a previously untested product or brand. This hurdle for many more value orientated retailers has now been overcome. Consumers have tried products and now realise that lower prices do not always lead to inferior quality, therefore, the need and desire to trade back up is diminished.
Only time will tell whether consumers will return to a focus on premium brand and premium pricing. One thing though is certain, the retailers that survive the recession will be those whose business models are fluid enough to constantly adapt to changes in consumer buying behaviour while retaining and promoting their core brand values.
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