Will Highly Fluid Consumer Behaviour Bring About The Death Of ‘The Brand’?

Revitalisation of what ‘The Brand’ stands for is critical in these changing times.

Brands today face the biggest shock to consumer behaviour since the concept of ‘The Brand’ was formed.

The latest grocery sales data shows that consumer behaviour is changing fast. Brands are being left behind as consumers’ trade down and change their eating habits.

Revitalisation of what ‘The Brand’ stands for is critical in these challenging times
Everyday a new batch of data is released to show that brands are under threat. Some of the more interesting stats are:-

97% reduction in profits at Starbucks: consumers are skipping the morning coffee and Danish pastry on the way to the office

Growth in categories which have been in long term decline: Bread and Cereals are back in growth

Power of promotions: consumers switching to products always on promotion. Several big brands now sell over 75% of all volume on-deal

Growing threat of own label: Tesco’s launch of its Discount brands puts another threat on the shelf to big brands

Dropping of Environmental Trends: Environmental drives by brands is having little impact on sales in the recession, forcing brands to get back to basics and side-line carbon and other environmental issues as a core brand strategy.

Adjusting to the new world order
Brands today face many threats to their survival. All of our clients are studying sales data for any clues on how consumers are changing, and what this means to their brand in the longer term.

Evidence so far shows that consumers are retreating away from luxury items (e.g. a Starbucks on the way to the office), and are reverting back to the tried and tested products which they grew up with. Breakfast is back as a core occasion, with bread and Cereals back on the menu. However, Own Label is taking a fair chunk of the new sales in these categories, with promotions and good tasting products driving repeat own label purchasing.

Priced to extinction
The death of ‘The Brand’ has long been forecast. With consumers ditching brands for cheaper own label products, is the value of ‘The Brand’ to consumers now at a seminal moment in time? Consumers are getting more exposure to Own Label products and finding that on the whole, they taste just as good as their normal brands. All of a sudden, with economics forcing consumers to trade down, the trial of own label is leading to its longer term adoption. Brands therefore find their worth to consumers diminishing quickly.

Feeling Smart
Research by Bain & Company has found that consumers feel more educated and satisfied when they trade down. Remember the time you found something new and spoke to your friends about it? That’s how consumers feel about Aldi, Lidl and the other own label products they are buying – they feel that they are discovering something that everyone should know about.

Consumers get an emotional benefit from trading down to own label, which is replacing the emotional benefit consumers used to get from brands. Going forward, this is going to be difficult to counter.

Rejuvenation
How do Brands counter the fast changing trends? Re-visiting the heritage of the brand, what your brand stands for and your target consumers is very important, as is making sure your product delivers above and beyond the performance of own label. Innovation, line extensions, special editions and promotions will all be important to build and deliver sales.

Most importantly, understanding the multi-facetted nature of brands and that there is no one simple solution that can be done to counter the threat of Own Label, is vital.

Halting decline and returning back to growth requires a co-ordinated review of the brand, to ensure that it has the power to pull consumers back from own label. By excelling in everything they stand for and not losing sight that in today’s new world, consumers want and expect value, brands can survive. But it’s going to take a lot of hard work to grow through this recession.