Brand Loyalty Slides for Third Consecutive Year

There was this notion that all the resources invested in advertising, marketing and promotion built decades long customer loyalty that increased sales and enhanced profits. The returns were virtually guaranteed, especially if you could land consumers early enough, hence the fascination with 18-34 year olds who were supposedly making brand choices for life.

What a difference a lengthy recession makes.

For the past three years, brand loyalty has continued to decline and it shows no sign of stopping. 90% of consumers are choosing private label or store brands over so-called national brands, the ones that are heavily advertised.

The two primary reasons for this are shopping channel proliferation and the decline in household incomes.

Proliferation has expanded choice - and confusion. As the following article explains, customers surveyed say that the lack of coordination across channels and platforms has reduced the impetus for commitment. With so many offers on so many ostensibly legitimate channels via so many competing media, the premium that established national brands used to enjoy has been whittled away. This trend has been exacerbated by the now multi-generational decline in household income. When your economy depends on consumer purchases, reducing their ability to pay does tend to have a deleterious effect on sales. D'uh.

This is why convergence has become an imperative for marketers. It is difficult to track from whence customers are getting the cues that drive behavior and then sales. Messages and offers have to be consistent and self-reinforcing rather than competing. At the same time, business interests need to recognize that supporting policies which deplete the many will ultimately impact the few in much the same way. JL

Sheila Shayon reports in Brand Channel:

As brand loyalty continues to slide for the third consecutive year, Deloitte's annual American Pantry Study shows close to nine in 10 consumers are choosing private-label or store brands over national brands.

"Every manufacturer has been affected by this," said Pat Conroy, vice chairman and U.S. Consumer Producers Leader at Deloitte. "None of the manufacturers had as many must-have brands as they thought they did. The playing field has fundamentally changed. It will not go back to the way it was right before the recession…Manufacturers must find a way to differentiate the product and find a better way to get the product into the consumer's pantry."
As for consumers, an air of remorse hangs over their heads from a past filled with careless spending habits, which was exacerbated by the recession. “They tried various lower cost options and the vast majority of them found there was little noticeable difference in quality. This was an epiphany for the consumer," adds Conroy.
In order to sway back consumers, retailers need to focus on creating a seamless shopping experience across all sales channels, including in-store, online and on mobile devices, according to new research from Accenture.
“Seamlessness is a tall order for most traditional retailers,” said Chris Donnelly, global managing director of Accenture’s Retail practice. “Traditional retailers must take stock of their operational capabilities. They require a presence at every stage of the customer journey to deliver a consistently personalized, on-brand experience from discovery through research, purchase, fulfillment and beyond to product maintenance or returns.”
49 percent of consumers in the study said the best thing retailers can do to improve their shopping experience is better integration of shopping channels, while 89 percent say more choice of those channels is paramount. 94 percent found in-store shopping easy enough and 74 percent said the same of online shopping, but just 26 percent found the mobile shopping experience easy.
While mobile and online shopping becomes a more integral part of a retailer's offering, companies can't forget about the significance that a brick-and-mortor store holds for brand recognition and relevance. "The store, as the heart of the brand and its emotional center, cannot be starved of investment and innovation, or appropriate levels of design, media and technology. It needs to be the showcase for interesting new collaborations to keep things exciting, whether it's a luxury jeweler or a humble dollar store," according to Interbrand's 2013 Best Retail Brands report.
As for frustrating consumer trends like 'showrooming' and 'webrooming,' it doesn't look like they're going to fade away anytime soon. For retailers like Target, Walmart and Best Buy, removing the showroomed items from stores is the quickest way to nip the trend, but a move like that could ultimately hurt the bottom line. Indeed, it seems that blending the in-store and online experiences using shopper apps, real-time price comparisons and interactive displays may be the only way for retailers to come out on top of online giants like Amazon and Google.