Why Life Isn't
Grand for Brands
Rising
inflation, and more powerful tools that allow consumers to compare and buy
products, is putting some big names under pressure. They can't live off the
past--neither can your company.
BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN
Much like the COVID-19 pandemic completely
upended the centuries old idea of the five-days-in-office work week, made Zoom
(and its lesser clones) an essential workplace and social tool for users of all
ages, and accelerated the nationwide adoption of insta-clinics and telemedicine
by roughly a decade, the pandemic's supply chain disruptions, abundant price
gouging, and the resultant rampant inflation have also changed consumer
behaviors. Shoppers today are absolutely crushing the price premiums that major
brands in every vertical have historically been able to extract from consumers.
Interestingly enough, because beggars can't be
choosers, we're seeing that private labels and other store and local brands are
also more available and attractive to consumers than the bigger brands - even
apart from price - because they're more likely to be locally sourced and
produced and therefore able to beat some of the supply chain and trucking
issues in order to be more regularly available on the store shelves. One of
Covid-19's lasting lessons will be the need for vendors to have far more redundancy, resilience and local warehousing
capability.
Online shopping, which puts us just a click
away from a cheaper choice and voice/mobile search, which places a premium on
an answer rather than a choice, have already dramatically
diminished the incremental importance of packaging and brand identities.
But the economic pains and other disruptions caused by Covid-19 and their
influence on "smart" shoppers may have had an even greater and longer
impact.
In addition, the mass onsite and drive-by
testing protocols, along with casual neighborhood inoculations of millions of
Americans by strangers in random popped-up locations, have also completely
changed consumers' perceptions of, and relationships to, their
"family" docs, the mystery and magic of exorbitantly priced wonder
drugs, and to the
traditional ways of accessing, securing, and delivering health care.
If you think any desperate consumer cared whether they were getting a Moderna or
a Pfizer shot in the rush to get vaccinated, you don't understand how little
the brand name of the vaccine mattered.
We have now trained hundreds of millions of
consumers to expect "free" tests and vaccinations, to have these
administered by quasi-professionals they've never met before or vetted in any
way, and, most importantly, to be utterly indifferent to the brand and
manufacturer of any vaccine that they were fortunate enough to receive. Of
course, there were plenty of resistant and stupid anti-vaxxers-- may they
rest in peace. And, while the world isn't yet entirely convinced that generic
drugs will get the job done in every case, the genie is never going to be fully
stuffed back into the bottle.
However, the single biggest shift so far and
the greatest threat to the big legacy brands has been in the ways in which we
view and manage our time.
It's only now becoming apparent that one of
the very modest silver linings of the pandemic and all of its continuing
consequences is that it gave every one of us the gift of additional time. Life
slowed down, work became more episodic and manageable for many of
us. Millions of others retired (voluntarily or otherwise). And the
idea-- which had come to seem like tech-centric gospel--that our time was
more valuable than money has gradually morphed into a new view that making a
life is immeasurably more important than making a living. Also, that,
while trading money for time would always be a calculation of consequence, we
now all had an opportunity to reevaluate how to best strike the balance between
the two and their relative primacy and priority in our lives.
We abruptly and unexpectedly had a
moment-- free of history, prior obligations, and most
consequences-- to catch our collective breaths, take stock of our lives
and decide how best to get on in a new and reordered reality.
It turns out that when you give people new
choices, they ask hard questions about the value of old products and fancy
brands top that list. Millions of consumers took that opportunity to examine,
reevaluate, and compare their work, options, services, products, commitments,
and relationships, and even religions in new and different ways. Freed from the
daily stress and pressures of traditional office work and from the FOMO feeling
that everything always needed to be done at once, the world took a beat and the
big, expensive brands across the board are taking a beating as a result. If you
think buying Bayer, Tide, or Charmin for just a few bucks more is still seen by
millions of consumers as a bargain, when the house brands are clearly just as
effective, you haven't been shopping lately. Again, when the issue is simply
getting TP (as it was for a month or two during the pandemic), what name, type,
or flavor it turns out to be doesn't make a bit of difference.
Brand loyalty used to be an inertia-driven way
that we escaped decision fatigue. Instead of the angst of having too many
choices and too little time to think about them, it was easiest to stick with
the tried and true. In typical test cases, buyers offered too many choices
simply pass and choose to buy nothing. No one is looking for more choices; they
want clear and obvious solutions that they can be confident in and which they
believe were provided by vendors and suppliers whom they could trust. Brands
used to offer that promise and assurance and acted as a form of shorthand for
trust and authenticity. Of course, that was before the rampant rise of
shrinkflation, which again has been largely attributed to (mainly because it's
so obvious) to the big brands and major producers whose packages and contents
have been reduced.
But post-pandemic life is changing in many
ways. Given the luxury of additional time for a variety of reasons and a
pervasive sense that prices are out of control (they aren't) and that consumers
are being gouged by predatory retailers along with the interesting fact that
dads are doing a lot more of the day-to-day shopping, the whole retail
experience has become a new ball game.
Comparison shopping is rampant and made infinitely
easier by the internet. The idea, ease, and satisfaction of investigating LKQ
(like, kind and quality) products available at lower price points has taken
hold, and the immediate and visible presence of more and more private
label and generic products aggressively advertised and promoted at
demonstrably lower prices for what are essentially identical famous brand
offerings has put enormous pressure on some brands who provide staple goods to
become far more price competitive.
Every aisle in every store now offers
side-by-side comparative advertising -- along with claims of equal
efficacy and results -- and more and more consumers are becoming
comfortable with the switch to private label and generic offerings. These days,
the greater the perceived similarities between products appear, the less
important a specific brand choice becomes and frankly the web has made for
millions of smarter consumers as well in terms of appropriate substitutions and
generic alternatives. It wasn't too long ago that no one could even pronounce
ibuprofen and now it's got Tylenol on the run.
Big brands became lazy during the pandemic and
convinced themselves that their brands
alone would carry the day even in the face of shrinking package
contents accompanied by increased prices. They made two major errors: (1) they
confused frequency of purchases with loyalty when the fact is that there were
often few or any alternatives for the typical consumer, and (2) they believed
that consumer purchase and brand choices were expressions of preference when,
in fact, they were often dictated by availability.
There's really no end in sight to the
continued deterioration of consumer attachment to any specific brand per se, which
means that the big brands need to move quickly to up their value proposition -
by increasing the bundle of benefits their products and services offer as well
as the overall experience. They need to keep raising the bar unless
they're prepared to fall further and further behind their competition.
Brands only partially control their own
destiny today. The wisdom and knowledge of the crowd and the clock have just as
much to do with their fate and fortunes as anything within their own direct
control.
AUG 30, 2022
The
opinions expressed here by Inc.com columnists are their own, not those of
Inc.com.