Lockdown and its aftermath have brought about a destruction of trust in society. In fact, it could be said that the only residual trust is the faith people place in brands.
With the benefit of over two years’ hindsight, we can now see that one of the biggest casualties of Lockdown has been trust. Amidst all the turmoil of the past two years, the loss of faith in politicians, the judiciary, banks, traditional media and other institutions means consumers are increasingly checking ‘under the lid’ and taking nothing for granted, with ‘Buyer Beware’ now a default position…Since the global financial crisis of 2008, given 14 years of artificially low interest rates and mountains of printed money (so called ‘Quantitative easing’), we have been able to live and perhaps die beyond our means. Moreover, what started as emergency measures are now life support essentials for many businesses… If in doubt, watch while companies fall by the wayside as they have to return from the various tax and other ‘cost’ holidays granted during Lockdown and its aftermath, especially inflation-driven increases in interest rates as we pick up our obligations. We are fast approaching payback time, and it already hurts… In other words, many companies are in no state to produce sufficient ROCE to survive in the New Norm.
Meanwhile, consumers are trying to survive in a toxic mix of inflation and uncertainty on many levels. There is a mix of different degrees of inflation at different stages of the pipeline, some real, some the result of opportunism. Some caused by ingredient cost inflation, some resulting from having to substitute ingredients, thereby impacting the taste, but each inflationary element diluting potential sales.
All of the above are resulting in increased prices, putting us on a path towards 20% inflation and more. Inflation is being applied in many ways, all adding to the distrust and suspicion. Take the variety of ways of expressing a price increase on shelf. This can mean going for a straight one-off increase, hoping the consumer will accept paying more for the same amount of a well-known brand. Alternatively, we can try dithering bit-by-bit increases, hoping the consumer will not notice the price creep, and reach a point where rejection of the brand is the only option…
Then there is the Letter-of-Law vs. Spirit-of-Law option, shrinkflation. In effect, shrinkflation can be an outright attempt to deceive our most loyal consumer, the consumer that knows the brand specification almost as well as our technical team. The brand owner actually thinks a regular user will not notice the reduction in contents and that those that query and challenge the shortfall will accept our Letter-of -Law explanation of the weight change difference hidden in the small print, forgetting the danger of a loyal user deciding to get even rather than wasting breath getting mad. In shrinkflation, we thus have a recipe for destroying hard-won trust, at the very least…
It is a given that willing repeat-purchase by a regular user is the only real test of consumer (or retailer) need-satisfaction. Trust in the brand can guarantee increasingly profitable return visits of the consumer to the brand, requiring less and less persuasion to draw them back and retain their patronage. Moreover, given the encouragement of always receiving more than it says on the tin, we can even achieve a level of product satisfaction that moves the consumer to ‘tell-a-friend’ mode, effectively becoming a brand ambassador on our behalf. Key to this level of supplier-consumer relationship is complete trust in our brand…
So much for brand management pre-2020. However, in March 2020, as we have seen above, the introduction of Lockdown began the erosion of consumer trust in everything… In fact, consumers are also now approaching payback time as they enter the ‘New Norm’. They now have to view the world through a lens that reveals levels of inflation that few have experienced in their lifetime.
As a consequence, consumers, retailers and suppliers are being forced to re-evaluate everything, including their value systems, as they try to cope with rapidly rising energy, food and sheer living prices. The obvious signs are changes in how we measure what we believe is good value for money. In effect, we are looking afresh at how and where we buy. In practice, consumers are shopping more often, thereby wasting less. They are choosing different products (even own-label!), in smaller amounts, and are shopping closer not only to save petrol. Health and necessity are but additional factors in their decision-making…
A fundamental re-set is taking place at all levels in how the consumer assesses value, within a context of second-guessing everything, because they feel they can trust no one.
Lockdown and its aftermath has brought about a destruction of trust in society. However, it could be said that trust in a well-tried brand might be for many consumers the only truth among all the distrust…
In their quest for real value, consumers are seeking simplicity and consistency in their purchases, with choice of retailer being a slow-burn process in some cases. In fact, few will remember the arrival of a down-market small shop with a very limited range that dared to enter the sophisticated UK retail grocery market in 1990. And now, 32 years later, Aldi are actually pushing Morrisons off the No.4 spot of the mults’ ivory tower…
With consumers completely changing their way of measuring value, they are getting closer to a simple value for money assessment and are moving towards the ultimate simplicity, the discount offer. Then Aldi could move towards pole position, IMO.
Add the idea that anyone would ever trust their money to the Internet in order to buy online, let alone patronise a garage-based bookseller and allow them to grow to a 500m SKU offering of Amazonian proportions, all based on trust…
Trust in the brand can be a source of stability amidst the misinformation, and the more incredible the misinformation and official deception becomes, so it will result in less and less trust in the system, and the more a trusted brand will stand out.
Basic trust in the brand evolves over time, not because of reams of research, official assurance, or copious details on the label, but simply because of a combination of the brand name/logo, reliance on common sense and years of personal repeat usage giving me the confidence that when I remove the lid, the contents will even exceed my expectations, every time. In fact, a favourite brand can provide me with sufficient satisfaction that I will even recommend it to a friend...
That same trust and endorsement means my friend will not have to waste time second-guessing the offering. Also, given some degree of expectation-management to dilute my natural optimism, I will have hopefully started a new user on the road to years of brand satisfaction and loyalty.
Given the market turmoil, consumers are re-evaluating where they shop for real value. They are also second-guessing their sources of brand information, especially their use of traditional media. One simply has to check the 7% annual fall in newspaper circulation and moves from broadcast TV to an increasing variety of streaming services to appreciate that fundamental change is taking place in media usage.
However, it is only when one examines the emergence of Retail Media that it can be seen that a means of communicating with a hand-in-wallet shopper, in the aisle, at point-of-purchase, with a tailored message based on all a retailer knows about every aspect of that buyer’s buying and consumption behaviour, has to represent a complete break with the blunt message of traditional broadcast media. Only those with a brand marketing background will fully appreciate the size of threat that Retail Media represents for baggage-laden traditional media. That baggage means that consumers will increasingly trust and rely upon Retail Media in connecting with their brands…
Another trust-builder is emerging via Deliveroo. Now that home delivery has become Quick Commerce, and embraced Retail Media, the consumer can add Deliveroo to their sources of trust amidst the market turmoil (see Deliveroo launches ad platform). As Roger Dunn, Head of Retail Media at Criteo, says: “Deliveroo presents an exciting opportunity, especially for brands that are specifically relevant for quick commerce - so energy drinks, ice cream, and all those other impulse buys that don't necessarily stand out during a more considered weekly online shop, but consumers occasionally want... and quickly!”
We would add that it will be a big brand in a quick commerce category achieving spectacular success via the Deliveroo platform that will deliver a big ‘shot in the arm’ for Retail Media.
On balance, we believe that brand loyalty, built on trust, and always delivering more than it says on the tin, has to be your way of optimising your greatest asset.
Over to you…
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