Consumers Are Done Paying Up for Premium Services

Premium Burnout

There’s a premium option for every other consumer product, from cereal to cars. But increasingly, Americans aren’t willing to pay big, challenging companies to rethink their pricing power.

Changing Course

Here are the receipts: FedEx (FDX) said last week that its customers are no longer opting for faster shipping options, and sticking with lower-priced standard shipping instead. Southwest (LUV) found itself forced to discount non-peak ticket prices in the fall, and Target (TGT) lowered its sales expectations as Americans tighten their budgets.

Consumer demand is down and price sensitivity is up.

Across sectors, companies are finding it tougher to profit without raising prices, and more difficult to retain customers if they do so.

Budget Crunch

American consumers have been through the ringer in the past years. The fact that consumer spending has kept up with the relentless inflation of the past years has baffled economists and investors. Time and time again, the conclusion was that something would have to give, eventually.

People’s pullback from premium options may be a symptom of just that, giving us an area to watch closely as the new year gets going.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS24010303