The Premium Stress Test

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For three years, you raised prices, and customers paid.

Inflation gave you cover. Everyone was raising prices. Consumers grumbled but kept buying. Premium brands got comfortable.

That's over.

75% of consumers are now actively trading down to cheaper alternatives. Not just thinking about it. Doing it. Half are delaying discretionary purchases entirely.

Some premium brands are about to fail the stress test.

The question you don't want to answer

Put your product on a shelf next to the private label.

Now explain, in ten seconds, why someone should pay 40% more for yours.

If you can't do it, your customer can't either. And they're checking now.

Private label represents over 20% of grocery sales and growing. Costco, Aldi, Trader Joe's are taking share. TJ Maxx is outperforming department stores. Dupe culture is eating into beauty. Refurbished electronics are gaining.

When consumers were flush, they didn't scrutinize the markup. Now every purchase is a conscious choice. And a lot of premiums are getting re-evaluated.

The two kinds of premium

Some brands are premium because they're better. Ingredients, durability, functionality, service. Put them next to the cheap alternative, and the difference is obvious.

Some brands are premium because marketing made them premium. The product is fine. The packaging is nice. The positioning is aspirational. But if you squint, it's not that different from the store brand.

The first kind will hold. The second kind is in trouble.

Consumers had money and didn't question the markup. Now they're questioning everything. And "because we've always been premium" isn't a defensible answer.

The traps

• Discounting. The reflexive move. Cut prices, run promos, chase volume. You might save the quarter. You'll destroy the brand. Once you train customers to wait for deals, you can't untrain them. You've turned a premium business into a promotional one.

• Denial. Hold price and wait for consumers to come back. Maybe they will. But if they try the private label and it's good enough, you've lost them permanently. Customer acquisition is expensive. Customer re-acquisition after they defected to a cheaper alternative is nearly impossible.

The uncomfortable work

• Audit your differentiation. Not your positioning. Your product. What is actually, measurably, demonstrably better? If the answer is "brand equity," you're in trouble.

• Prove it publicly. Consumer Reports ratings. Durability tests. Ingredient transparency. Third-party validation. In a skeptical market, claims require evidence. "Trust us, we're worth it" doesn't work when consumers are actively looking for reasons to trade down.

• Segment honestly. Not every SKU deserves premium pricing. Some products are genuinely differentiated. Others are coasting on halo. Hold price on real innovations. Let the commodities compete on value. Pretending your entire portfolio deserves a premium when half of it doesn't is how you lose credibility on all of it.

• Find the defensible premium. 65% of consumers still value speed and convenience, even while trading down on product. If you can't win on product differentiation, win on experience. Delivery speed, service quality, frictionless returns. Those are harder to copy than a nice package.

The shakeout

Personal consumption growth is forecast at 1.5% this year. Down from 2.5-3% the past two years. The Fed is signaling one rate cut, not three. This isn't temporary pressure. This is the new baseline.

Some premium brands are going to lose share permanently. The ones built on marketing rather than substance. The ones where the premium was always a story.

If that's your brand, this is the moment to fix it or accept it. Cutting price now might save the business. Pretending the premium is real when it isn't will just delay the reckoning.

And if your brand has genuine substance? This is your moment. The pretenders are about to get shaken out. The consumers who remain premium buyers will be more valuable, more loyal, and more willing to pay for real differentiation.