Challenging economic times call for brands to focus on the premium customers says retail research institute
In challenging economic times, brands need to look to the premium end of the market to find growth, according to the Roy Morgan Research Institute.
The research firm has conducted a national survey of Australia’s high-spending premium consumers to identify their favourite brands. Three retail brands featured in the top 10, which the Institute said tells the story of the economy’s current woes.
Roy Morgan found Vintage Cellars to be the standout premium brand both nationally, while the David Jones brand appeared to retain attractiveness to premium spenders, despite its recent challenges.
Roy Morgan ranking of Australia’s top-10 premium brands
1. Vintage Cellars (Coles Group)
2. Audi
3. American Express
4. Qantas (international)
5. Harris Farms Markets
6. David Jones
7. UniSuper
8. Zara
9. Emirates
10. Lexus
Overall, Roy Morgan noted the economy is slowing, with consumer spending in decline. The proof is in the numbers as ABS data released last week showed consumer spending was outstripped by household saving for the first time in five years, while the retail sector has slumped to its weakest level since the 1990s. Yet that's not the only story.
Roy Morgan CEO, Michele Levine, noted consumer spending is being cut in some areas, while going up in others - the feature of a two-speed economy, driven by premium and budget consumers. In line with this, the term 'premium' applies not only to brands and experiences, but also to consumers, she said.
“The word ‘premiumisation’ is on the lips of business leaders eyeing off the economic fast lane while, at the same time, the slow lane is becoming even more commoditised. In today’s slowing economy the premium market is thriving,” Levine commented.
Roy Morgan said its research found there are 10 million Australian consumers in the economy’s ‘slow lane’, and 4.7 million premium consumers in the ‘fast lane’. Furthermore, 91 per cent of premium consumers are in the top-third of elective spenders in the economy.
To harness growth in challenging economic times, particularly with the prospect of a potential period of recession, brands need to be sure they appeal to premium customers, Levine said.
“Business leaders are now recession-proofing their brands by recognising (a) there is a two-speed economy, and (b) they can now reach, motivate, and acquire these truly premium consumers as their most valuable customers,” she added.
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