Loyalty to Nationally Advertised Brands Declines

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June 30, 2010

Due primarily to the protracted recession, loyalty to nationally advertised brands has been falling over the past two years, according to research conducted by Decision Analyst Inc.

Based on a survey of 15,384 U.S. grocery shoppers, the company’s “Anatomy of the Recession” shows that in an effort to save money, consumers are showing considerably less loyalty to established brands.

For example, between the third quarter of 2007 and third quarter of 2009 the percent of consumers who reported they usually buy the least expensive brand regardless of brand name increased by nine percentage points, according to the report.

During the same period the percent of Americans “willing to pay more for nationally advertised brands’’ declined. The most dramatic drop (five points) occurred in the period between the first quarter of 2008 and first quarter of 2009.

“At first glance this is troublesome news for U.S. retailers,’’ said Diane Brewton, senior vice president of Decision Analyst’s strategic consulting group. “The negative shift in loyalty coincides with the recession. As the economy trended down, consumers tried to save money by switching to less expensive alternatives.

“However, retail sales have stabilized enough to give us a basis for cautious optimism,” she added. “Positive changes in consumer attitudes should translate into better sales for brand names this year. The primary uncertainty is the long-term effect private label products will have on the branded products.’’

The Anatomy of the Recession report is based on information from a comprehensive health and wellness study called Health and Nutrition Strategist, sponsored by Decision Analyst, based in Arlington, Texas.

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