Clientbook Blog
November 16, 2023

The pros and cons of premiumization for retailers

Premiumization is a retail trend that has brands focusing on high-dollar, premium products in an effort to elevate their brand and encourage customers to think highly of them.

This phenomenon is well known in the beverage industry, (think premium wine options and the rise of craft beer) but beverage manufacturers aren't the only ones embracing the trend.

The New York Times reports that this premiumization trend is impacting the American economy as a whole with more and more companies pushing premium products with higher prices.

If you're new to this latest retail trend and want to know more, this article is for you. Read on to learn more about what premiumization is, its pros and cons, and how to decide if it's a good strategy to implement at your retail business.

What is premiumization?

Premiumization is when a brand emphasizes the quality of their products compared to other brands. Some brands will even offer a luxury or premium version of their products and sell them at a premium price. By offering competitive premium products, brands encourage consumers to think of their brand as elite.

For example, a fashion retailer could release an exclusive line of shoes that are in limited supply and sell them at a higher price in hopes that consumers will want to purchase the shoes so they are one of the few owners of this premium offering.

Curious how to win Gen Z's business? Check out our free guide on the next generation of luxury for retail tips

Pros of premiumization

Getting on board with the premiumization trend can benefit retailers, especially for those looking to take advantage of the impressive spending power of the upper class.

Let's take a look at a few of the benefits of taking a premiumized approach to retailing.

You can elevate your brand

First, offering premium options to your customers, or really emphasizing the quality of your high-end products, can elevate your brand and help you stand out from competitors in your industry.

For example, a fashion boutique that offers authentic products, like genuine leather jackets, is likely seen as a higher-quality brand than one that sells cheap fakes. Similarly, that level of status is translated onto the wearer of the jacket once they purchase it, instilling a sense of pride and loyalty in your brand and products.

You can attract high-spending luxury consumers

Next, premium positioning can attract luxury consumers to your brand that have more disposable income, allowing you to see continued growth in sales and customer acquisition.

After all, the more you emphasize your high-ticket items, the more you'll earn sales with consumers that can afford them.

Gen Z is becoming a big player in the luxury market, and showcasing your premium products can play a huge role in getting them to shop with you over a competitor.

You can make more by selling less

Finally, a premiumization strategy can allow you to make more money while selling less products overall. This is because it takes fewer expensive products to hit the same sales goal as selling a higher number of inexpensive products.

This also means your high-spending customers need to come into your store less often and will still have the same, if not higher, customer lifetime value as your customers who shop with you more often and purchase less expensive items.

Cons of premiumization

While premiumization has its perks, it's not without its shortcomings. You'll want to consider the following disadvantages of premiumization before implementing the strategy at your retail store.

Even luxury consumers have limits

First, premiumization depends on your wealthier customers making purchases with you, but even luxury consumers have limits on how much they want to spend. Especially during uncertain economic times.

Forbes reports that even today's more affluent consumers are experiencing effects of economic turbulence, with a "richcession" potentially on its way.

According to the report, LVMH, the luxury industry’s pacesetter and market share leader, generated $86 billion in revenue in 2022. However, they experienced a slowdown during the fourth quarter, with organic revenues up only 9% after seeing double-digit increases during the first three quarters. Brands like Kering, Estee Lauder, and Tapestry all saw similar drops in revenue during their fourth quarters.

So if even the top luxury brands are seeing a decrease in sales, this points to a consumer trend of lowered spending, even among the wealthy. And if people aren't spending as much, encouraging consumers to fork over even more money for your high-ticket items may not be a very effective strategy during this time.

You limit products and experiences for the middle class

Next, your most expensive products, while certainly high-quality and likely worth their price, may be out of reach for middle class consumers. This can then exclude your brand to only the upper class.

In some cases, this is by design. For example, a custom suit shop may only cater to clients that can afford the best materials, and they wouldn't want to attract teens looking for prom rentals. So knowing your audience is key here.

However, if you are trying to attract customers who need more affordable prices, premiumization may not be the right strategy for your retail store.

It's difficult to sustain long-term

Finally, a premiumized approach can be a difficult strategy to keep up with in the long run. Especially if your customers don't respond to it as readily as you thought they might.

Imagine trying to sell only the finest products, sourced from only the best carriers, wrapped in only the most appealing packaging, and so on. If you don't sell everything you invest into your business, you could find that you've bitten off more than you could chew.

How to treat every client like a VIP—with or without premiumization

Whether or not you embrace premiumization is up to you and what makes the most sense for your retail business. However, no matter your choice, treating each of your clients like a true VIP is possible with Clientbook.

Clientbook is a client management app and web platform that allows you to store client data, build custom wish lists for each client, and even get automated reminders when it's time to follow up with a client. That way, you'll be able to personalize the shopping experience for each of your clients, making them feel like your most important customer.

If you're ready to see how Clientbook can help you elevate your brand and improve the shopping experience for your clients, meet with one of our experts today.

Interested in clienteling? Download our free Clienteling Starter Kit to begin improving relationships with customers today


As a retailer, whether you embrace the rise of premiumization head-on to target luxury consumers, or instead choose to offer a proliferation of budget options to capture consumer spending by the middle class, the status of your brand doesn't have to rely on the kinds of products you sell.

By using a client management tool like Clientbook, you can offer each of your clients the personalized experience they deserve, setting your retail store apart from the rest.

Book a demo with Clientbook to see how our software can help you showcase your store as a premium experience for everyone.

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