Are Premium Brands Unlucky in This Election Year?
What this year’s election could mean for your high-end brand.
Premium brands were forecast to face a difficult year in 2016, according to Bain & Co. Compounding this insight is historic data showing that election years tend to be difficult for high-end brands. Learn what the rest of this year will spell for your high-end brand sales based on historic patterns and fresh analytic insights.
Historical Performance of Brands in Election Years
Data from the last 20 years demonstrates that consumers tend to delay big purchases in an election year. The election process creates anxiety and uncertainty regarding the future. When consumers do not know how their lives will change under a new leader, it is understandable that many delay. Because people who purchase premium products tend to have more disposable income, does this general theory still hold true for high-end brands?
The trends suggest so. After all, high-end home brands are lifestyle choices, not needs. A shopper whose old refrigerator bites the dust is unable to delay buying a replacement, even if funds are tight. A luxury home goods shopper who wants an Aga stove for pleasure can hold off, as long as her current stove works. The purchase isn’t subject to the same urgency. Many shoppers are deciding to wait a little bit to get that hot new splurge, given the volatility in the markets.
Historically, affluent shoppers drive the retail sector anywhere, doing 50 percent of retail shopping. When thinking about general retail trends in election years, it’s important to remember that high-end home brand shoppers are the ones driving these trends, not budget-minded consumers.
What High-End Home Brands Can Expect in 2016 and Beyond
Another important factor affecting shopping is the strong dollar. When the dollar is weak, tourists spend significantly more than when the dollar is strong. Tourists enjoy purchasing premium products, especially when the dollar gives them an advantage.
To capture consumer interest even in a down market, retailers can shift the way they market premium products. Marketing that focuses on the luxury aspect of high-end goods can turn off consumers. Ads that focus on different aspects of the product — such as quality or reputation — will connect more successfully. Consumers may feel good about spending more on a product if they know the product was made ethically and will last for years.
Consumers also enjoy uniqueness and customization. Many high-end brands offer these features. By tapping into the things consumers need to buy and stressing brand advantages, premium brands can capture a greater share of 2016’s limited sales.
While the rest of this year may be a wash, high-end brands have plenty to look forward to in 2017, if Bain’s projections hold up. Next year is supposed to be a better year for retail. Come January 2017, a new leader will be sworn in and the tense election cycle will be over. Whether shoppers are consoling themselves over the election or celebrating a leader whose victory they supported, they will head back to the stores.