How Brand-Loyal Are US Customers? Look to Price and Availability
Buying Different Brands
Amid rising inflation and stretched-thin supply chains, US shoppers are looking for affordable items, all while shelves display a lot of empty space. It’s having an impact on spending habits, as evidenced by data from consulting firm Daymon Worldwide. Between May 2020 and August 2021, around 70% of shoppers said they’ve tried a new or different brand since the start of the pandemic.
Retail executives report consumer loyalty is no longer commanded by widespread advertising or well-known brand names. The availability of products and their price are the biggest factors driving what is being bought at grocery stores. Market research firm IRI has determined brands with low stock rates have experienced diminished consumer loyalty.
Companies Affected
If consumers are willing to change up the brands they buy, it could put larger food companies such as Kraft Heinz (KHC), Kellogg’s (K), and Coca-Cola (KO) at risk of losing market share. Conversely, many supermarket operators have reported more flexibility in dealing with these big-name producers that now worry about competitors beating them to the shelves.
Some grocery stores have started reevaluating the products they sell. Some varieties of cookies, crackers, and salty snacks may be eliminated as sales lag or if certain suppliers are slow to make deliveries. Local brands have become more preferred as they are more able to keep products in stock, and transportation costs are lower.
The Future of Grocery Shelves
Some grocery store executives say there are certain categories where consumers are less likely to deviate from their preferred brands, such as cereal and ice cream. For this reason those products may continue to be offered in wide varieties. Supermarkets have traditionally been wary of lesser known brands in general, as they worry that will drive customers elsewhere.
Still, with brand loyalty on uneven footing, some grocery store operators see an opportunity. Many explain it provides leverage with larger companies which can eventually lead to lower prices. For others, the burdened supply chain allows things to stay simple: customers prefer any brand of OJ they can get if the alternative is no orange juice. For now, it seems whatever you can grab on the shelf and the price sticker attached is more important than the logo on the label.
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