The firm published its first in a series of articles sharing survey results and analysis this month on its own site. ‘Saving, scrimping, and…splurging? New insights into consumer behavior’ by Max Magni, Anne Martinez, and Rukhshana Motiwala, reveals that among packaged-good sectors, “cosmetics…had the highest trade-up rates, suggesting that higher-end brands…were able to persuade consumers that their products are worth the price premium.”
The survey results are based on responses from 22,000 consumers from more than 20 countries around the world. And, “because the survey was administered online, the sample largely reflects the characteristics of the typical online population—younger, urban, and more affluent,” explains the article’s methodology sidebar.
More consumers than not are cautious nowadays, according to ‘Saving, Scrimping, and Splurging.’ Globally, a majority are concerned about the prospect of job loss, while a minority feels positive about economic issues.
The McKinsey article offers up five truisms about current consumers:
- They proactively search for savings.
- They are brand-loyal . . . but only if the price is right.
- Once they ‘trade down,’ they might not go back.
- They are selective splurgers.
- They shop across channels.
Should income rise, consumers globally would not all go shopping at once. Only 21% of North Americans told McKinsey that if their pay increased by 10%, a third of it would go toward new spending. In Mainland China, 46% of consumers would spend that portion of the increase.
Even better news for brands catering to this region, “65 percent of [North Americas] expressed no concern about losing their job,” according to the survey.
Beauty stands out
Among consumers who changed their buying behavior with regard to cosmetic products in the past year, 16% of North American shoppers traded up (spending more on products based on the perceived or advertised value), as did 16% of Mexican and South America consumers combined.
It’s a statistic industry leaders have already begun responding to. With its premiumization strategy, “Unilever is essentially moving into luxury product with its acquisitions and with existing brands,” reported Cosmetics Design earlier this month.
“Through small changes in formulation and packaging, the company can command a premium price for well-trusted products,” we reported. “For example, a 0.6oz tin of the Vaseline Rosy Lips (formulated with a bit of aroma and color) retails for nearly the same price as a 13oz container of the brand’s basic petroleum jelly.”