High-end products are becoming a boon for businesses, from Starbucks to Unilever, despite the cost of living crisis and record inflation.
It seems that the more expensive option does not turn consumers away and in fact seems to do the exact opposite.
Starbucks, for example, is focusing on personalized drinks and drinks that customers are less likely to get elsewhere to promote brand loyalty and give customers a reason to come back.
The response has been strong according to Rachel Ruggeri, chief financial officer of Starbucks in a report by CNBCwho said, “It tells us we have an offer worth paying for.”
In the last quarter, Starbucks beat Wall Street expectations and reported record numbers of customers and sales.
Kraft Heinz is doing the same, even after raising prices more than 12% to deal with higher labor, ingredient and transportation costs.
The company launched its HEINZ 57 collection in July. The condiments are “chef-inspired” and “designed to add magic to the dining experience,” according to the company.
Elsewhere, Disney Plus has also announced that it will raise prices for its premium service as reports surfaced that it overtook Netflix as the most subscribed streaming service. The basic subscription for $7.99 will include ads, while those who want an ad-free service will have to pay $10.99.
Valuable products are just as important
Predictably, the increased emphasis on cheap products is also something companies are sensitive to.
This includes McDonald’s which attributed some of its growth in the United States to its value products in its second quarter 2022 earnings report.
However, the key to keeping customers in a rising inflation environment is to provide both premium and value products, according to Paul Martin, head of retail at KPMG in the UK.
“While it’s true that some consumers increasingly have to turn to value products and watch every penny, it’s also true that other consumers are nervous about the economic outlook but still have cash. to spend and are basically transitioning to premium products,” he told CNBC.
“In this landscape, value faces a boom, as does premium. Supermarkets recognize this, including discounters, which are expanding their core value ranges but also bolstering their premium offering. Their goal is to capture and retain all declining audiences.
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