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Median and top quartile revenue have increased across all sectors except Apparel and Luxury. Price-sensitive consumers are prioritizing cheaper alternatives and hunting for bargains. Companies that have benefited from higher prices are now finding it harder to raise them. To compensate, they have shifted from offering premium products to enhancing value. While costs have started to fall, companies are resistant to passing savings on to customers insofar as even reducing product and packaging sizes. As a result, profit margins have increased in most sectors except Home & Outdoor. Economists expect profit margins to remain elevated in the near term. Will the “value” strategy continue to benefit, or will a new long-term strategy be necessary as consumer spending continues to be put to the test?
On a monthly basis, AlixPartners charts sales, sentiment and supply chains in consumer-facing businesses. Learn more about the Consumer Products Corner newsletter and read previous articles, here.
