New York
CNN
—
Many consumers have given up on premium products after nearly two decades of inflation.
Adobe Analytics has shared new research with CNN that shows the extent of this trend in trading down online.
Adobe says that in 11 categories, the market share for high-priced goods has fallen to those of lower cost.
The market for the highest priced quartile in personal care products was 31% as of January 2019. Adobe reports that these products represent just 7% in the market as of February 2019.
Over that time, the market share for personal care products in their cheapest category has doubled to 54%.
“As inflation hits consumers and really impacts their buying power, they are shifting to the cheaper products offered online — across the board,” said Vivek Pandya, lead analyst at Adobe Digital Insights.
The trend continues even though inflation is cooling off from its 41-year peak in the middle last year.
Similar results are being seen in grocery stores, where the prices of everything from meat to fruit and eggs has risen over two years.
Online grocery shopping’s most costly tier has dropped from 24.5% to 9% in January 2019, to just 9% today. Adobe stated that the market share for online grocery products with the lowest prices has increased by 13 percent to almost half of it’s market value.
“Consumers are having to down-shift and forgo certain premium products and instead go for the cheaper ones. In groceries, that means people shifting from organic fruit to non-organic fruit,” Pandya said.
Prices for food at home increased by 10.2% over the last 12 months, according to the government’s February Consumer Price Index inflation report.
According to an earlier Tufts University report, one of the reasons that food retailers are growing fast in America is their shift from selling expensive products. Aldi and other lower-priced supermarkets have seen stronger growth over recent years.
Online shoppers are trading down not only in food but also electronics. According to Adobe, the lowest tier of goods on the market has risen from 25% to 39%.
“In 2020, consumers were flush with stimulus dollars and savings. Now they are much more constrained,” said Pandya.
Online shopping is becoming increasingly popular among consumers who are price-conscious.
Adobe stated that the most costly tier of apparel used to be about one-fifth market value as of January 2019, but it is now only one-tenth.
Online toys even more expensive than they used to are being taken out of the market. Online toys are now at 13% of their market share, compared to 25% four years ago.
“It’s pretty apparent we are still dealing with a very price-conscious consumer who has had to deal with a lot economically,” said Pandya. “It’s going to take time for them to shift away from this behavior.”