Companies confront ‘trade down’ economy
Consumer companies like Nespresso say they’ve had to try harder to convince shoppers to pony up hundreds of dollars for coffee makers.
Economic conditions have led consumer companies to adjust their strategies, prompting them to "trade down" in the current economic landscape. Nespresso, for instance, has found it more challenging to convince shoppers to invest in their premium coffee makers, given the rising cost of living due to increased gas prices. Nespresso's US marketing chief, Jessica Padula, acknowledged that consumers are experiencing financial strain and are likely to "trade down" from Nespresso to more affordable options like drip coffee.
Padula drew a parallel, stating that trading down from a $8 or $9 coffee shop latte to a Nespresso coffee maker would be a more cost-effective choice.
Similarly, Estée Lauder's president of makeup brands, Lisa Sequino, pointed out that consumer expectations are evolving. While a well-designed lipstick is essential, Sequino emphasized that brands are increasingly investing in creating lipsticks that also smell and taste good. Sequino explained that this multi-sensory approach aims to enhance the overall shopping experience, making the purchase feel more luxurious.
She drew a connection between lipstick sales and the famous "lipstick index," which has historically shown increased lipstick sales during economic downturns as consumers seek a small indulgence to maintain a sense of luxury.
Written by urgent.news from Semafor's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
