Willing to Switch

Before cigarette ads were banned from television, one long-running series of commercials featured a succession of people who sported black eyes and proclaimed: “Us Tareyton smokers would rather fight than switch.” That was back in the days when U.S. product marketers were dedicated to creating big brands and intent on building fierce consumer loyalty — the type portrayed in that Tareyton ad — to those brands.

But the mantra for today’s consumers might be: “We would rather switch than pay more.” Only 31 percent of today’s name brands fall into consumer “must have” territory, according to the “2014 American Pantry Study,” a survey-based study commissioned by New York-based Deloitte LLP and published in May. The study found that seven in 10 shoppers are spending less money on foods, beverages and household goods than they did before the Great Recession. Yet they don’t feel as if they are sacrificing much.

“While consumers initially resented buying less-expensive products out of necessity a few years ago, they have changed their tune,” says Pat Conroy, vice chairman of Deloitte and the company’s U.S. consumer products leader.

Findings from another recent survey-based study — “How American Shops: Switch — Swap — Trade,” published in April by New York-based WSL Strategic Retail — seem to jibe with Deloitte’s findings. Many consumer respondents reported that they now have two or three brands that are acceptable, or “good enough,” in any given category, allowing them to willingly switch between them according to which brand is on sale when they need to buy it.

“During the recession, shoppers learned how to find lower-priced options — stores and brands — and see no reason to change today,” WSL notes in a press release. “It’s a smart precaution, and for many, including higher-income shoppers, a badge of honor.”

Although consumers’ shrinking loyalty to any particular retailer (or channel, for that matter) is concerning, their increasing willingness to switch brands bodes well for retailers’ own brands. In the Deloitte study, 88 percent of respondents said they have found several store brands that are just as good as national brands.

But decisions based solely on price for a product deemed “good enough” won’t necessarily benefit a store brand product when a branded alternative is priced below it, when it’s up against one of the top 10 percent of “must-have” brands, or when it’s situated in one of the categories where Deloitte notes consumers are less willing to switch, even in light of price increases — beer, pet foods, soft drinks and coffee. Here, retailers’ efforts to differentiate and build a relationship of trust with their shopper base might help to sway those shoppers to give the product a try.

Deloitte’s study, for example, found that 54 percent of respondents opted for a more expensive newly launched product in the past year because it was a brand they trust, while 38 percent did the same for a more healthful option. And 30 percent did so because they trusted the company. Although these findings are specific to consumer packaged goods companies, they most certainly also apply to store brands as decision influencers.

Kathie Canning, Editorial Director
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