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Only the best will do: the growing appetite for premium features

With increasing wealth around the globe and a growing target group which is enabled to buy premium products, value becomes a more and more important driver. Consumers’ preference for “owning fewer but higher quality items” came strongly across in our latest Consumer Life study. Especially in developed and saturated markets, value growth is the main opportunity for retailers and industry together.

Consumers are upgrading their devices

At the forefront of this development smartphones reveal this trend. While many markets already reached a certain saturation and global units sales are not growing, the value development is still promising. Consumers are upgrading their devices and flagship models are well in demand.

Also for TVs, premium features such as 50+inch sizes and OLED turn a negative volume market into a value growth market. Further prominent examples are audio devices equipped with Dolby Atmos or DTS-X sound technology as well as high performance headphones and headsets above 150 Euro selling price.

Multifunctional appliances with premium price are strong in demand

Willingness to invest in the place to live is reflected by the growth of value segments in household appliances. Multifunctional appliances with premium price (for example washdryer, hobs with integrated hoods or combi-steam ovens) are strong in demand and spark value growth. Also lifestyle plays a role, especially for small domestic appliances, when consumers are willing to spend more than 300 Euros for a rechargeable handstick vacuum cleaner or a robot.

While demand for desktop computers or notebooks is still under pressure, also here the increasing sales of gaming PCs results in elevated prices and growing premium segments. But also non-gaming PCs/notebooks pick up in selling price and drive the market value again.

Overall, it becomes evident that this overarching premium trend originates in consumers choosing for value segments offering more performance, convenience, quality or similar. While this drives prices up as a mix effect, like-for-like products usually are still experiencing price pressure. Consequently, permanent innovations justify the premium price which consumers are willing to pay in 2018.

 

This blog has been written by the Strategic Insights team.

 

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