Thursday, July 19, 2012

Who's minding the store?

If you thought reports on the shifting attitudes in the US about marriage and homeownership startling; then you too will be surprised that US consumers are changing their attitudes about brands.
The research 
The Pew Research center recently reported that marriage rates among adults 18 or over has fallen to 51%, with the median age at first marriage higher than ever for brides (26.5 years) and grooms (28.7),

Only 65.4 percent of Americans own their homes, which may be the lowest level in 15 years, an alarming rate considering that 2004 marked the highest rates.  According to data compiled by Bloomberg, the current rate however matches the average reported by the Census Bureau since it began reporting in1965.  
OK, now there's confirmation that  changing lifestyles  are also evident in shopping patterns too. In a recent study sponsored by Accenture,  the economic downturn may not fully explain why in-house, or store-brand product sales have increased.  Admittedly 2/3 of shoppers now buy store brands; and mostly they buy them for their economy, they are cheaper.  But half of the consumers surveyed expressed no discernible difference in quality and 42% buy the store brand because its trustworthy. If the study is right,  77 percent of shoppers say they will not decrease the amount of store brand products they buy — even if their disposable income returns to the same level as it was before the economic downturn.

Signs of the times or signals to change?
Change seems to be the hallmark of the times, life going forward took an off-road turn with no evidence that it will return. The long held if, then else causal assumptions associating purchase habits with key lifecycle events enabled well-run brands to gain marketplace mastery and a steady increase in profits. Cracks in the validity of these assumptions create an additional speed bump on top of the recessionary pressures.
Brands, and the business of branding  contribute significantly to economic growth. The capital spent on furthering the awareness, reputation and quality of a brand is all about ratcheting up or sustaining the association of a given product or service and consumer purchase preferences.
Geoffrey James offer this simpler explanation.
...branding can associate an emotion with a product, especially when pointed at highly impressionable buyers (e.g. young men who watch beer ads), in the vast realm of B2B sales and even in most consumer markets, there is one, and only one, thing that creates customer emotion: the customer’s experience with your product.

So are these shifts irrevocable, related, or will people snap out of their current patterns? What  consequences do shifting consumers perceptions of store brands foretell? 
Is the decline of shopper interest a failure by the premium brands? In other words, do consumers really feel as if their reputation of greater overall value, as in higher quality, no longer warrants   their higher price?  Or, maybe store brands are more successful in changing consumer's perception of their brand's higher quality? The coincidence of lower prices  with the effects of  communications and marketing efforts makes it a little more challenging to sort out.

Hold on before I go off the deep end on these findings, I need to point out that as surprising this news may be, my experience in interpreting consumer trends recognizes the pitfalls of relying on averages or raw counts to tell the story.  Should I care who the 500 shoppers were? Would learning more about the distribution of the shopper's  demographic characteristics  be meaningful?  Especially when  no two shoppers are exactly alike, there are some things that will remain fuzzy.  I'm willing to trust that Accenture managed to pull their sample correctly,  that the results do accurately scale and project similar wider population shifts .
Personally, I suspect a high degree of interaction between all three of these trends.  It's why I raised attention to them in this post.  After all married couples, more than likely with double incomes , shop the decision process differs from single person households.  The shopper wants to please or surprise or endear themselves to their partner, buy what makes them happy, or  more comfortable.  Brand loyalty measures some of this when it also satisfies these experiential needs.   If my partner becomes unhappy, we can blame the brand not the shopper.

Do I really want to let the findings go so quickly? Toss them off as a by product of changing demographics ?  Maybe its time brands stopped to smell the coffee, see which players are worth fighting and which shoppers are worth fighting to keep or win. Maybe it's time brand leaders  acknowledge the obvious changes in the environment.  As a climatologist mentioned this morning, in the Sahara no one talks about drought because everyone knows that the conditions are natural and that heat happens and will continue.  If conditions have taken that off road path, time to  set to work on alternative business models, relationships or collaborations! 

Which arguments do you find more persuasive?  Which paths would you stake your future? I'd love to hear your thoughts

No comments:

Post a Comment

Share your thoughts