The FINANCIAL — Consumers in developed economies are prepared to spend more of their budgets on branded products, according to a new report released by The Boston Consulting Group (BCG). This is good news for a collection of 30 branded companies whose appeal spans generations—from baby boomers to Millennials.
The report, titled The Resilient Consumer: Where to Find Growth amid the Gloom in Developed Economies, also found that around two-thirds of consumers in richer economies plan to trade up to higher-priced goods and services in categories that are important to them, such as travel, large home appliances, and housing.
Fifteen brands rank in the top 30 for both boomers and Millennials. But 29 brands appeal to only one or the other of the two generations. The top-30 list for Millennials includes newer companies, such as Google and Asus, as well as several older brands that have managed to position themselves well for younger consumers, such as H&M, LG, Puma, Nokia, Converse, Gucci, and Dior, according to BCG.
The report found that 40 percent of consumers in developed economies regard brand name and reputation as reasons for trading up to higher-priced products within the same categories—a 16 percentage-point increase from the 2012 BCG Global Consumer Sentiment Survey. In general, more consumers in 2013 said that they plan to trade up to higher-end products in the categories they care about most—and that fewer plan to trade down. Two-thirds of consumers in developed economies also report concentrating their spending on the few categories that matter to them most. There was a 14 percentage-point increase from 2012 in respondents who said they are willing to pay more for products because the “categories are more important to me.” The only exceptions were the hardest-hit European economies: Spain and Italy, according to BCG.
Consumers in developed economies have a high affinity toward brands—especially among members of the Millennial generation, according to the report. There was a 16 percentage-point increase from the 2012 survey in respondents who said that they are willing to pay more for products because of the brand. What’s more, 55 to 65 percent of consumers surveyed in each developed economy said they believe that consumerism is good for the economy and society—and 56 percent across all nine nations said that buying makes them happy.
“Consumers in developed economies have proven to be remarkably resilient,” said Christine Barton, a BCG partner and lead author of the report. “Our research indicates that the current low consumer sentiment is a symptom of present economic conditions—not some fundamental shift in people’s desire to buy or a wholesale rejection of consumerism,” Barton added.
Consumers in richer nations indicated that they attach greater importance to personal enrichment and social responsibility. Forty-five percent of consumers across the nine developed economies said that if they pay luxury prices, they prefer to do so on “enriching, expanding experiences over things.” Fifty-seven percent said that they want to know more about how products are made and where they come from, according to BCG.
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