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Make way, fashion! Food and drink are the new premium treat of choice

New research from independent creative agency Impero has revealed that consumer spending habits have changed, with respondents willing to spend money on food (47%), alcohol (38%), holidays (36%), coffee (33%) and beauty (31%). Fashion is set to lose out, with 32% of consumers trading down to prioritise spending elsewhere.

Prompted by the news that some 56% of consumers feel like they are worse off vs a year ago [NielsenIQ, 2023], Impero surveyed 1000 UK consumers, via their cultural insights and research platform ‘The Move’, to identify current shopping habits in relation to premium goods – and ultimately help brands thrive despite the cost-of-living crisis.

Hype and scarcity are no longer attractive to premium consumers, with only 6% agreeing that these would be purchase drivers. Instead, consumers – particularly younger generations (31%) – are buying affordable luxuries by opting for mid-range brands over traditional luxury. Nike, Samsung, British Airways, Clinique and John Lewis are popular choices for this new consumer mindset.

Those surveyed had an average yearly spend of £671on premium products. Millennials aged 35-44 were found to be the biggest spenders with an average of £1000 a year.

The research outlines ‘the new rules of premiumisation’:

  • Express yourself – brands must use imagination and originality to design new rituals and occasions to reach undiscovered audiences.
  • Use values to prove value – value is more than price deep, consumers are willing to spend in other ways such as through education or emotional investment.
  • Redefine to realign – unlock new meaning by reimagining your brand for a new generation. Consumers increasingly allow brands to evolve and change their offering.
  • Functional dominance – The battle lines between luxury and premium lie in ‘elevated essentialism’. The consumer mindset is shifting from a luxury image towards what a product can offer in terms of functionality and convenience under its ‘premium’ claim.

Charlotte Willcocks, Head of Strategy at Impero, said: “There is little research into what brands need to do now to maintain dominance in an ever-changing premium space which is why we wanted to publish the ‘new rules of premiumisation’. There is a lot of pressure for brands to show value resulting in a race to the bottom in who can claim ‘value’ best with a stripped-down approach. However, the research shows there are a huge number of consumers still looking to trade up through everyday luxuries so there is a disconnect occurring. There is an opportunity for brands to meet the consumer demand.”