Consumer frugality trumping brand loyalty


Survey / PollDeloitte notes that even as the economy shows genuine signs of improvement, consumers are sticking to the thrifty grocery and household shopping habits they developed to cope with the lengthy slump. Among the casualties of persistent consumer tactics are national brands.

It isn’t even close, ladies and gentlemen: Fully 94% say that they are going to keep household spending right where it is, despite an improving economy. 92% say they are more resourceful consumers; 86% claim that they are precision spenders; and 72% say that it doesn’t feel like sacrificing.

DeLoitte’s Pat Conroy commented, “One of the most notable year-over-year trends in the study is how embedded frugality has become due to the recession. Prudent consumers and improving perceptions about store brands are squeezing national brands’ position. The gap between the few ‘must have’ brands on shoppers’ lists and others on the shelf may be widening, making it more important for brands to differentiate through innovation, quality and performance. Consumer product companies may also consolidate low and mid-level performers and shift investment to the category leaders.”

Brand loyalty has suffered three consecutive years of decline as a result of new consumer attitudes. Store brands and on-sale brands are the items moving off shelves these days.

It’s not all over for brand loyalty, however. The strongest loyalty builders are outpacing their competitors by a 20% margin, says Deloitte.

Loyalty cards are very important: 39% of consumers have three or more, and 58% use them every time they shop.

RBR-TVBR observation: As the recession has played out we’ve seen a lot of expert opinion to the effect that spending habits adopted out of necessity would become ingrained in most. That actually can be a good thing once everybody has adapted to the new reality and supply and demand levels are resynchronized.

For broadcasters, the message is to assist your clients with their messages – and first and foremost, they need to remember that consumers are looking at how good an actual product is and what it says on the price tag. The name on the package is a secondary concern.

Brands that want to succeed will need to show exactly why their product is worth a little more, and it will need a better argument than that it spends money on really entertaining commercials.