Is brand loyalty on life support?
One thing that never seems to change is that there will always be change. Nowhere is that more apparent than in the retail world. Brick-and-mortar stores are under assault from online completion. Shrinking sales are threatening major retail stalwarts such as Macy’s, J.C. Penney and Sears. Grocery chains are consolidating, and consumers are demanding more fresh and healthy food products.
Major brands with which America has grown up are also facing difficult times. A recent Nielsen report shows that this year, consumer packaged goods sales in the U.S. have dropped 2.5 percent, and big brands are being hit hard. PepsiCo, Inc. and Procter & Gamble report lackluster sales in Q1, and the 20 largest CPGs had flat sales while smaller companies posted a 2.4 percent growth rate.
Reflecting major cultural changes, American tastes and values are changing. Just two generations ago, loyalty was highly regarded. There weren’t as many options on the shelf. If a brand worked and was consistent, consumers tended to stick with it. Now, most people believe that while change may be uncomfortable, it is good and necessary. And we’ve become accustomed to change occurring at an accelerated pace.
As a recent Forbes article by Kathleen Kusek points out: “Lifetime consumer loyalty is no longer a valid goal in the world of CPG because as much as it suits manufacturers, it’s simply no longer meaningful to consumers.” The article explains that consumers now change brands not because the brand failed to perform, “ but rather its inability to seem like an entirely new and interesting option at every single purchase cycle. ”
Increasingly, people seem to be investing in experiences and not possessions. We’ve seen examples of CPGs trying to create brand experiences via omnichannel messaging. Omnichannel is a multichannel approach to sales that seeks to provide the customer with a seamless shopping experience whether the customer is shopping online from a mobile device, by telephone or in a bricks-and-mortar store looking at the packaging.
Often called the “first moment of truth,” packaging plays a major role in establishing this connection. In a recent Esko presentation, Dominique Bonnafoux, senior strategist at retail specialist Fitch, said that while packaging’s primary purpose is to protect, its role has “evolved towards attracting consumers, facilitating purchase decisions and driving differentiation from competition.
“Omnichannel,” she says “could be the making of packaging … looking beyond graphics and format to reinforce the consumer experience, thus taking it much further than its origin as a simple protective wrapper.”