COVID-19 shatters consumer brand loyalty
Consumers have been particularly concerned about product availability as food manufacturers make adjustments to accommodate the surge in retail demand during the COVID-19 pandemic. Temporary stockouts and empty shelves have caused a disruption in brand loyalty and led to a rise in the trial of private label and national brands of groceries.
According to statistics from AlixPartners, up to 65% of US customers reported trying new brands after staying put became mainstream. Most (79%) claimed that the reason they did so was that their typical product was not available.
Fast-selling staples such as meat and protein, dairy, pasta, canned goods, frozen foods, bread, and baked goods have seen a particularly high rate of substitutions.
Price sensitivity has also played a role. Compared to national brands, there has been a greater readiness to explore new private label brands.
“One of the likely causes is that consumers have had uncertainty or direct impacts to their incomes going through the current crisis, and private label typically has a lower price line,” stated Randy Burt, managing director of AlixPartners’ consumer products business. “That’s not merely the result of a stockout. We also witnessed that during the severe recession of 2008 and 2009.
According to AlixPartners, consumers have tried new private label brands at rates of 15% to 25% and new national brands at rates of 10% to 20%.
Additionally, indications have surfaced that the changes in consumer behavior may not stop once the crisis is over.
According to Mr. Burt, “a fairly high rate of consumer suggestion indicates that they will stick with the brand they have tried.” “Over time, the brands that can maintain their shelf presence and handle demand surges resulting from COVID-19 and the transition from eating out to eating in will have the opportunity to fortify their brand recognition.” The individuals who were unable to maintain inventory will face a hurdle when we, hopefully, emerge and begin the healing process.
Customers were willing to persist with a new national brand up to 30–45% of the time, and 25–30% of them claimed the same about new private label brands.
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After the incident, almost half of consumers who tested new salty snacks under the national brand stated they would continue to use the new brand. After trying new private label products, consumers were more likely to stick with new candy, pasta, nut butters, and fruit and nut-based snacks in addition to basics like bread, meat, and dairy.
Even when shelter-in-place orders and restrictions on non-essential activity are released, there is still projected to be a high level of demand throughout the supermarket.
“Those trends toward cheaper food and eating at home are going to continue if we see a recession coming out of COVID-19, which is not certain by any means,” Mr. Burt stated. “The trend away from restaurants is not going to change anytime soon, which means that some of the recent spikes in demand will be more durable.”