1 in 3 consumers agree, “I like to seek out new, small brands rather than buy from known, large brands.”* Brands could see that as a threat (“that could be 32 percent of my buyers switching to an alternative!”). Or, breathe a sigh of relief, looking at the data the other way and finding 68 percent of consumers aren’t searching for new, small brands when they shop (“My big brand is still secure—we’re not dead yet!”).
In support of the first data point above, large CPG companies in the U.S. have ceded $22 billion in sales to small companies from 2011-2016, with their share growing to 26 percent (BCG, IRI). The latter data point is consistent with a recent New York Times article that references research by University of Chicago Booth School of Business economists that finds consumers today tend to stay loyal to their favorite brands and products, comparison shopping less.
Yet, consider that for people age 18-34 the agreement to the statement is in the low 40’s. That means 4 out of 10 people in that age group are actively seeking alternative, fresh brands, rather than shopping from long-established brands. They, like most generations, don’t want what their parents or grandparents purchased. They also have different standards for what they are seeking in brands. But this can’t be all that is driving the trend. In this study, we also found that 62 percent of people want to support companies and brands that stand up for their beliefs and 7 out of 10 respondents agreed with, “I expect companies and brands to contribute positively to society.”* (There was no variation across age groups.) So, the fact that Millennials seek out brands that have a purpose and contribute to society is not the only factor driving them to fresh, young brands. The behavior is also being driven by a desire for better products with consideration for how and where they are made, an affiliation with craft, wanting more personalization, and new companies aligning with this cohort’s lifestyle and the way they shop.
The numbers are also higher for women agreeing with the statement, 36 percent, compared to 27 percent for men. This could be driven simply by the fact that women tend to be more active, comparative shoppers than men. It could mean that women are valuing freshness more than men who might be prioritizing trust. Or, could it be driven by the fact that more women are on platforms like Instagram where new brands might advertise to build awareness?
If you’re concerned by this statistic, what should a brand marketer do?
- Study the strength of your brand equities and understand if they are under threat of losing relevance with consumers, especially younger consumers and women?
- If your brand is losing relevance, consider how you can refresh and revive your brand. This may mean creating a new brand positioning or it could mean simply changing how you market the brand in a new way that remains consistent with the brand’s existing core values. Don’t think it isn’t possible. Just look at Denny’s, Domino’s, or Old Spice.
- Evaluate your brand portfolio. The answer could be in creating a new, fresh brand yourself or acquiring one to win with those consumers who are changing their shopping patterns and preferences, the latter being what so many big CPG companies are doing today.
- Finally, consider a new business model that is about curating and managing a mix of smaller, niche brands that can command higher price points and margins. The same New York Times article referenced above also noted that specialized brands command more pricing power. Targeting specific needs that make people feel understood, therefore, can command richer premiums.
The Consumer Forecast: Help me feel understood and provide products and brand experiences that align with my values and lifestyle.
The Brand Forecast: Help me reinvent my brand to be relevant to all consumers by remaining vibrant and of today.
*Source: Data from an omnibus study conducted by ProdegeMR with 500 U.S. adults ages 18+, June 2018.