The spending habits of the utmost tier of earners remains robust, but everyone below has cut back and plans to stay there. “If you look at the 10-15% [sales volume] declines for upscale retailers and brands, it was [due to] people spending beyond their means and not being able to sustain it,” said AARC president Ron Kurtz. Even within the sphere most would consider well-off ($250,000 average annual household earnings), 41 percent reported they’re making a conscious effort to reduce expenditures for the next 12 months.
Isolated data? Hardly. Consumer Edge Research recently found that skipping top-shelf brands in favor of lower-end ones is most common in households with incomes of $100,000 or higher. A study conducted by PriceWaterhouseCoopers/Kantar Retail earlier this year revealed that 93 percent of shoppers say they’ve changed their shopping behavior—with 17 percent opting for cheaper brands. “Although we’re starting to see signs of shoppers getting tired of trading down, they remain cognizant of today’s economic realities,” said a Kantar official in a statement. These findings are in line with last year's McKinsey study, which revealed 41 percent of consumers think that premium brands are “not worth the money.”
So much for life’s little indulgences.
Read more at Brand Week.
