Brand loyalty declines as economy suffers amid pandemic

Source: Unsplash
Source: Unsplash

Job losses and supply chain disruptions contributed to the decline, according to an Omnicom Media Group study.

Brand loyalty took a hit in 2020 as consumers, struggling with job losses and a disrupted supply chain, went with alternative options. 

Among U.S. consumers, brand loyalty dropped from 65% in March to 49% in November, according to a study from Omnicom Media Group. The study, conducted across 13 waves of online research from March to December, surveyed up to 1,100 people between the ages of 18 to 72. Ethnicity, regional and household income breakdowns of the group reflected the U.S. Census.

Brand loyalty eroded mostly in response to devastating job losses in the U.S., as people struggling with income loss defected to cheaper products, said Shreya Kushari, chief client officer at OMD. Others switched brands when the products they wanted weren’t immediately available due to logistical challenges. 

But consumers are more optimistic about 2021. Just 42% feel that the economy is weak, down from 64% in March. Half of those surveyed plan to pull the trigger on big-ticket purchases they put off in 2020, such as a car, a home or a vacation, likely this spring or summer. 

“It’s tied to the optimism that people are feeling in general about the economy,” Kushari said. “Whether it is the vaccine news, whether it is just a sense that this too shall end.”

Purpose still matters

Despite the devastating economic context, consumers adopted new brands that align with their values, and dropped those that don’t. 

Almost half (49%) of people in the study said they switched brands to “take a stand” in response to a brand’s behavior amid the social justice crisis this past year. 

17% stopped supporting a brand based on their response to social issues, while 25% started supporting a brand because of the way they broached the topic. 

“There was an increased expectation that brands need to have a lot more empathy for their consumers beyond just selling  products,” Kushari said. “They pushed on the consciousness of the people and said, ‘I would like to take a stand for equality, justice, freedom.’”

Media shifts

Consumer media habits also shifted considerably throughout 2020, as people spent more time at home. 

In the spring, 61% of respondents reported spending more time with streaming video.The number hit a peak in the summer with 66% of people spending more time with streaming video, before falling back to 61% in the fall.

The percentage of people who reported their social media usage and online browsing peaked in the summer before dropping off again in the fall. 

Podcast consumption also spiked during the pandemic. 26% of respondents reported spending more time listening to podcasts in the spring, increasing to 33% in the summer.

“Streaming is not going anywhere,” Kushari said. “Digital platforms are not going anywhere. People still seek out news while they disengage."

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