The current economic environment is making many consumers rethink and pull back on their spending. Yet, this isn’t necessarily true for New Economic Order (NEO) consumers. Bucking the trends of frugality and motivated by a desire for premium brands and experiences, NEOs are driving discretionary spending and creating a fast lane in the two speed economy.
At A.H. Beard, NEOs are at the heart of our business and for the last 123 years we’ve been committed to mastering the art of Premium Sleep. During this period, the global and local economy has changed — and our compass for navigating shifting business and consumer cycles has been understanding NEOs and delivering on their wants, desires, and expectations.
What is a NEO?
To understand how we’ve tapped into the NEO consumer, we need to first understand what makes a NEO. According to our Roy Morgan research, we operate in a two-speed economy defined by ‘NEOs’ and ‘Traditionals’ with very different mindsets.
NEOs are socially progressive, high-spending consumers that spend more than 300% more than their traditional counterparts. Traditionals, on the other hand, are guided by logic and a propensity for saving and considered spending. But don’t be fooled — NEOs aren’t a small subset of our market. In fact, they make up nearly a quarter of the population.
NEOs, like the average consumer, spend on ‘essential’ items however are set apart by their high levels of discretionary spending on the latest technology, travel experiences, discovering new places to dine, premium drinks, progressive financial options and services that ultimately elevate their lives.
And for this group, wellness is a key part of their lives — especially in a post-COVID era. This is contributing to a rise in luxury health tourism, increased spending on health foods and supplements and gym memberships, as well as health technology and aids.
This is where sleep fits into the equation, as a key pillar of health. And the demand for Premium Sleep amongst NEOs is clear, with the global market for sleeping aids projected to reach $168.98 billion within the next decade.
NEOs and Premium Sleep
When we think of sleep aids, many of us will think of wearables, which don’t just track our activity but our sleep too. But the foundation to unlocking Premium Sleep quite literally is the bed we’re lying on — a fact which is increasingly recognised and welcomed by NEOs.
An example of this is our growth and success in China. A decade ago, we observed strong NEO behaviours in China’s economy, including a focus on wellness and preference for premium brands. It’s for this reason that we focused on expanding A.H. Beard’s brand presence in the China market and delivering Premium Sleep to its growing population. As one of the globe’s largest bedding markets with 1.4 billion consumers, China’s sleep landscape is currently showing the most engagement.
While NEOs exist across the world, their consumer mindsets and behaviour will be influenced by the local landscape. Our leading partner, Shanghai Green, helps us understand the local market conditions and trends affecting NEOs in China so that we can better relate to them.
For example, the consumer market is traditionally price-led — with sales and discounts often shouted at the consumer. While these tactics are likely to work on a traditional consumer, they’ll have the opposite effect on a NEO. So being aware that NEOs want to self-discover, we’re very conscious about how we engage with our audience and opt for a more experiential process.
Speaking of the China market specifically, as an indication of success — A.H. Beard now has 50 stores across China, plans to open 50 more and a best-selling product retailing at $75,000. There’s no doubt that this is a reflection of the level of exceptional quality, performance and personal service that NEOs desire and expect.
There’s no doubt we’re operating in a two-speed economy. And the fast lane is being driven by a premium brand of recession-busting consumers known as NEOs. As our highest spending consumers in the economy, it’s their mindset that’s shaping the future. And if history is any guide, businesses who follow them will discover a more successful future.
Tony Pearson is CEO of A.H. Beard.