SymphonyIRI: Brand Loyalty Tilts Toward Store Brands

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September 13, 2011

Brand loyalty is a fluid thing and, according to a new report from SymphonyIRI Group, brands are deepening their bond with shoppers for both store brands and national brands.

Shopper preferences continue to change as the economy remains uncertain. According to SymphonyIRI Group’s current Times & Trends Report, “Brand Loyalty: How Understanding Brand Equity Impacts Brand Loyalty and Delivers to the Top and Bottom Line,” more dollar share is shifting to store brands, but largely in categories where there is already low loyalty to national brands. There is a cautionary message in this report for private label manufacturers as brand loyalty to some CPG brands grows stronger even as their prices increase.

“Consumers numb from a vacillating economy have embraced frugal ways and continue to make purchases deliberately and cautiously. Despite a period of prolonged economic difficulty, brand loyalty is strong and growing across a number of CPG categories,” according to the report. Shoppers are looking for value and recognize that value and low prices are not always the same.

“While most retailers and manufacturers will instinctively pull the lever to compete on price, it’s important to understand that consistently leading with price has significant negative impacts on brand equity,” says John McIndoe, senior vice president of marketing, SymphonyIRI. “Rather, CPG leaders must harness the power of value. The battle for the shopper’s loyalty should not be dictated by low price, and winning CPG marketers are clearly getting this message.”

Brand loyalty varies among product categories but is shifting toward private label products in categories where CPG loyalty is weak. Across the top 100 CPG categories, the largest drop in loyalty is seen in the refrigerated salad/coleslaw category. While brand loyalty is strong in this category, at 54 percent, private label loyalty has increased sharply during the past three years.

Private Label Loyalty Grows
Across categories where loyalty fell most sharply, private label loyalty has grown. The notable exception is the cream/creamers category, where increased brand switching has negatively impacted loyalty. Today, 14 percent cream/creamers buyers make less than half of their category purchases from a single brand versus 8 percent in 2008.

Other categories showing gains for private label include OTC drugs including cold/allergy/sinus medicine, gastrointestinal tablets and internal analgesics. Sugar, pastry/doughnuts, creamers, Mexican foods, coffee/tea and butter round out the top 10, according to SymphonyIRI.

Brand loyalty, however, is increasing in the categories of sports drinks, diapers, batteries, shelf-stable dinners, household cleaners, dry packaged dinners, cleaning tools including mops and brooms, shampoo, food and trash bags, and cat/dog litter. Brand loyalty actually increased across 45 of the top 100 CPG categories during the past three years, according to the survey. And in these categories, loyalty is strong enough not to be affected by rising prices.

For example, loyalty to national brands is 87.6 percent in the sports drink category and during the past three years, loyalty increased 6.5 points despite economic conditions and conservative purchase patterns. Loyalty also continues to grow in the blades and dish detergent categories, despite rather sizable price increases. But in categories like sugar and butter, where loyalty is fairly low, substantial price hikes have led to sharp drops in loyalty during the past three years.

“Interestingly, nearly all of the categories in which brand loyalty gains were highest already have fairly high levels of brand loyalty,” says Susan Viamari, editor of Times & Trends, SymphonyIRI. “In fact, loyalty is more than 50 percent in nine out of 10 categories shown—a striking reminder that true loyalty can survive even prolonged economic upheaval.”

Read These Related Articles:

• Study: Brand Disloyalty and Defections Prevail
• A.T. Kearney: Aging Baby Boomers More Brand Loyal
• Food Lion Promotes Private Label Milk on the Web
• Mintel: Store Brands Gain Ground Among Canadian Shoppers
• Study Proves Considerable Shifts in Brand Loyalty During the Recession

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