Companies today are realizing they will have to compete for the loyalty of their customers like never before. With changing behaviors and demographics, many longstanding companies have seen plummeting sales and a drop in consumer loyalty. This isn't just a Millennial trend, but older shoppers who once were brand loyal, are also changing their habits.
The 2008 recession has had lasting effects on shoppers and changed their buying habits. It's more common now to hear someone exclaim they aren't a brand person. Be it because store-brand goods are cheaper, or they simply don't have a strong bond with one brand or consumer-good item. This signals bad news for established brands.
The "holy grail" moment of shopping has now been lost as people turn away from brand loyalty and to the Internet.
This first moment of truth used to be something established brands could rely on: loyal customers choosing their products or new customers who were familiar with the brand name and didn't look elsewhere.
Companies have adjusted their business models or their products to appeal to a new mindset developed after the 2008 recession. For large companies like Campbell and Unilever this meant hiring new CEOs, and for Proctor & Gamble, this meant company restructuring. A report in 2015 already indicated that 90 percent of top consumer-goods brands had lost significant market share.
To understand all these changes taking place, we must understand how customers came to change their habits.
Young, impressionable workers starting to build their finances and shopping habits are prime targets for classic consumer-goods companies, but in recent years, have become harder to win over.
Most Americans today have similar shopping habits. This change distressed established brands who relied on loyal customers. According to David Luttenberger of research firm Mintel, "consumers today buy what performs for them" because "they are much less brand loyal" and are "driven by performance, convenience, by price." These three factors in one have shifted consumer habits. When canned soup was once a big seller, people now opt for quicker options. When once the softest brand-name toilet-paper won out, store-brand and equally soft, toilet-paper wins out today.
Today's shift in consumer shopping habits is no different than what happened after the Great Recession, only it is lasting longer and putting a strain on established brands.
Even as the economy improved after the Great Recession, many Americans favored cheaper, off-brand products. Consumers today may be dealing with the after-effects of the 2008 recession and have stuck with cheaper products, realizing there was no need to return their loyalty to established brands.
Another major factor shifting consumer buying behaviors is the Internet. Before, brands were only discoverable if they had the money for TV advertising and had the ability to promote their products in stores at the optimal height: at eye-level to hook every shopper onto their brand. Wall Street has even begun to show caution about consumer brands as they lose their prominence.
