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Shopping for Premium Brands After Brexit
- 61% of shoppers say they will not be discouraged from buying premium items even if prices rise by 10%
- 40% believe they will be worse off after Brexit and 37% assert they will be better off.
Independent research carried out in 2017 by the Centre for Retail Research into the likely impact of Brexit on sales of premium goods showed that most consumers would continue to buy premium brands, even if their prices rose. The research was commissioned by Rakuten Marketing. Premium brands are up-market or exclusive brands. Categories studied included formal clothing, footwear, cosmetics, perfume and fine fragrance, casual apparel, handbags and laptops, tablets and smartphones. The research was conducted in February 2017 by interviewing a random sample of 1,000 UK consumers aged 18 years and above.
Rakuten Marketing is a leading digital marketing company empowering marketers to realise their campaigns' potential across display, affiliate & social channels.
Will Shoppers Be Better Off in Two Years' Time?
Consumer attitudes varied about whether they would be better or worse off after Brexit, with 32.3% expecting to be better off and 40.6% to be worse off or not better off (Table 1). Males were slightly more optimistic than females: 33.4% of males expected to be better off compared to 31.3% of females. The regional averages showed that the North, which voted strongly for Brexit, was more optimistic about future living standards, with 39.7% of consumers in the North expecting to be better off compared with 33.9% in the South.
Future Spending on Premium Brands
Half (49.6%) of shoppers expected to spend the same or more on premium brands after Brexit but 39.4% said that they would spend less.
Where premium brands were produced abroad, 29.3% felt that spending on premium brands produced abroad could fall and a further 9.8% expected a large reduction in spending on these products.
Impact of Price Increases on Sales of Premium Brands
If the prices of premium goods rose by 10% or more, 61.5% of consumers would buy it anyway, although 23.0% would switch to a less-expensive brand or to a retailer's brand. The proportion of shoppers that would not buy the item at all was 5.9%; 9.6% would postpone the purchase or buy it less frequently than before.
We found a tipping point in premium-brand pricing. Although most customers would continue to buy premium brands even with a 10% price increase, if the price increase was 15% then over a fifth (21%) of shoppers who would otherwise buy the brands would switch products.
Trust in Premium Brands
36.7% felt that Brexit would not affect trust in premium brands produced outside the UK, but one-third (33.7%) believed there would be some or a large loss in trust. Products most likely to be affected included handbags, casual apparel and formal clothing, with laptops, tablets and smartphones being least affected.
The Research. 1,000 shoppers aged 18 years or above were interviewed in February 2017 by the Centre for Retail Research. Respondents were chosen to provide a representative sample of the UK population, 515 female and 485 males divided into six different age groups. The proportion in the North (including Scotland, north of England, Wales and Northern Ireland) was 46.2% and 53.6% in the South.