Henry

Web Smith of 2PM sent yesterday a newsletter with the subject line “So long, Henry.”

In it, he covers how HENRY (High Earner, Not Rich Yet) has struggled to remain the centerpiece archetype of DTC and aspirational brand consumers:

HENRY is a transitional cohort, not a class. A cohort that can no longer be ignored.” That cohort is dying as many have either transitioned to notable wealth or the vast majority with none at all. This is about the latter majority.

It reminded us of our commentary the other week on Temu’s growing popularity, the flip side of Henry and a growing cohort. In fact, to Smith’s point, growing in part because those who are now struggling previously weren’t.

Much will be written about softening consumer demand (especially after April’s inflation numbers come out mid month).

As more brands confront the reality

discuss exploring additional sales channels, it’s worth considering how loyalty has been built to date—especially as it relates to whether your customers are likely to trade down from you.

How have you built the brand? Are your loyal customers emotionally attached or behaviorally attached?

A couple years ago, we wrote in this space about the different types of loyalty. From that newsletter:

If you were to attempt an answer at those questions, you might start with further defining loyalty into at least two types:

• Attitudinal. Loyalty driven by a customer’s brand preference. Usually rooted in emotion.

• Behavioral. Loyalty driven by a customer’s actions. Rooted in repetitive behaviors (i.e., repeat purchases). 

The answer to which type you’ve built, it seems, may be an alternative place to start a strategic planning conversation (especially if you’re discussing a shift).

The answer, along with some customer development, may tell you why your customer is willing to stay with you right now or why your customer is leaving you right now. It may tell you whether you’re a brand that is easy to trade out, be it because of price, convenience or a combination thereof. It may tell you a lot about whether you’re fulfilling a want for your customer or a need for your customer.

A lot of that may sound like fluff.

But if you’re a purchase in a category that your customer is always going to make—and your customer doesn’t feel emotionally tied to your brand—you may be an easy target for the customer to trade down from.

If you catch this risk, you can begin to dissect the problem pretty quickly: Do we need to be cheaper? Can we afford to be cheaper? Do we need to be more ubiquitous? How do we do that? Etc, etc.

Positioning isn’t just where you fit in the market. Not in this sense. It’s always where you fit with the customer.

Understand that, and you’ll figure out if you’re at risk for being traded.