How Consumers’ Loyalty to Brands Has Shifted Throughout the Pandemic
Study shows changing shopping habits over the past 2 months
Key insights:
- Consumers are more likely to try new brands for products that can be swapped with little change in performance.
- Consumer behavior such as online grocery shopping is expected to continue even after the pandemic wanes.
- Covid-19 has provided an opportunity for brands to explore consumer substitution behavior and stay ahead of it to avoid lost revenue.
There’s good news and bad news for brands biting their nails during the pandemic, holding out on the hope that their former loyalists will come back when circumstances “normalize.” The good news? Consumers are creatures of habit, and as retailers begin to restock their preferred toilet paper or shaving razor brand, they often flock to what they know and love.
The bad news? Eighty-five percent of Americans indicated in a March 2020 Shopkick survey that brand names don’t matter during times of crisis—and, to make matters worse, according to an Alix Partners survey, 30% to 45% of Americans would stick to a new brand they tried during the pandemic.
Ecommerce performance analytics platform Profitero used its proprietary technology and algorithms in a recently published report—aptly titled “The Cheating Consumer”—to ascertain how consumer allegiances have changed throughout the course of the evolving pandemic.
Through these analytics derived from May and June data findings, the platform found that Covid-19 has provided an unprecedented opportunity across industries to not only explore consumer substitution behavior, but also to stay ahead of it to avoid the millions of dollars in lost revenue associated with loyalty switching.
Consumer loyalty levels are switching and shifting
Profitero’s research shows that, in the beginning of the pandemic, substitution and switching rates between brands were erratic and atypical due to the demand driven by precautionary stockpiling and anxiety shopping. The dry pasta brand category, for example, experienced a switching rate of up to 53% in April.
Exorbitant out-of-stock levels in the ecommerce realm during the first weeks of Covid-19 lockdowns and social distancing restrictions resulted in brand equity risks—billions went wasted and unrealized because products were not readily available for purchase, and consumers had no other choice but to go for competitors or lesser-known brand names. According to the Alix Partners survey that Profitero’s report cited, 69% of respondents indicated that they would purchase a different brand if their preferred one was not available.
Some categorical exceptions to this behavior were baby diaper purchases, which saw a small increase in brand switching in spite of out-of-stock levels. Per Profitero’s analysts, this could be because Pampers and Huggies combined already represent about 50% of global baby diaper sales and have enormous fan bases. Consumers may have shopped off of Amazon (where most of Profitero’s findings were gleaned from), and instead opted to find these preferred brands at another retailer.
Brand switching has eased up for categories such as male shaving products, diapers and pasta, while brand switching rates remain high for low-involvement categories such as toilet paper and disinfecting wipes where inventory supply is still limited and people don’t spend a lot of time thinking about what brand to grab—so long as it gets the job done. Both of these categories still had brand switching rates around 50% in May.
Brands need to be digitally prepared to survive
Per the Profitero report, Covid-19 has “caused 10 years of consumer behavior change in just eight weeks,” regarding the explosion of ecommerce and direct-to-consumer business models as one of those major transitions. Even categories such as groceries, which were considered essential brick-and-mortar businesses and have remained mostly open throughout the pandemic, saw this ripple effect. According to Profitero’s undisclosed industry sources, a surge of 40% to 45% of U.S. online grocery sales is being projected for this year. Moreover, the report cites that 43% of participants in a Harris Poll study noted that they would continue ordering online groceries for delivery once the pandemic ends.
As more shoppers move online, brands need to prioritize digital shelf initiatives such as content upgrades and promotions, and will need to improve the ecommerce shopping experience by optimizing supply chain flexibility. Examples provided by Profitero include taking pre-orders when you have confidence that you can deliver, encouraging subscriptions, limiting the products in your supply chain for items that are most in demand, and developing and diversifying your supply chain network and direct-to-consumer capabilities.
“COVID-19 has wiped the slate clean—your priority products will have changed based on what is relevant to shoppers now, as will the keywords shoppers are using to find them,” Andrew Pearl, vp of insights at Profitero, commented in the report. “Sticking to old strategic priorities and pre-COVID thinking is the quickest way to see your online share evaporate.”
Brands will also need to measure essential data metrics like search keywords, product detail page traffic and inventory availability. Investing in search placement and noting what consumers are searching for the most can signal early demand. Those digital insights are essential in ensuring that your online shoppers are getting their needs met and in preparing to have those products fully stocked when demand peaks. Brands that invest more in their digital presence can also start analyzing online ratings and reviews more deeply to get a grasp of consumer sentiments and to get inspiration for new product development and innovation.
