Although the recession has officially ended, the economy is in a slow recovery. We all know the no longer startling statistics: unemployment is nearly 10 percent nationally, and even higher in some areas and among certain demographics. Home foreclosures continue to hit record highs as home values continue to fall. More children are now in poverty. The high cost of a post-secondary education is so expensive that many people are starting to question if the return on this investment is still worthy. Afterall, college graduates have not been immune from the ranks of the unemployed and underemployed in this economic downturn.

And yet, we all still have to eat, we all need clothes to wear and babies need diapers.

There was a time when consumers would report that they only purchased Prego pasta sauce and Starbucks’ lattes. Others would only wear clothes from Macy’s, Nordstrom or other high-end retailers. And many parents would only buy Huggies for their infants. But that was before this recession. Now if you ask many of these same consumers who were loyal to these brands what they’re buying today, many will say they have switched to grocery store brands for many items like pasta sauce and diapers. And McDonald’s, or the coffee maker at home, has replaced Starbucks. And many people now shop at consignment and thrift stores for bargains on clothing for their families and home goods.

The National Association of Thrift and Resale Shops found in a 2009 survey of their members that sales rose 35 percent from the prior year, just as conventional retailers saw double-digit declines. And 2010 sales have continued to be higher than pre-2008 figures.

Brand Loyalty Declines
This may not seem surprising in the short term, but since this has been the longest recession we’ve seen since the Great Depression, the risks to consumers’ brand loyalty are real. As consumers get used to, and even begin to like, their new found cheaper brands, they will wonder if their old, more expensive brands were really worth the extra cost. When they do eventually have more purchasing power, they are likely to retain a bargain hunter’s mentality, partly for fear of future financial problems and partly because they will now expect the deep discounts that many retailers have been offering for the last few years.

Retailers have been starting sales seasons earlier and earlier, while consumers continue to wait longer and longer for the best deal before they buy. Back to school sales now start by June and Christmas sales pre-date Halloween in some stores. No one wants to pay full price for anything, but retailers are losing money as they strive to keep pace with their competitors. The National Retail Federation reported that sales for July 2010 were off 0.2 percent from June 2010, (seasonally adjusted and excluding auto, gas and restaurant spending), continuing weak sales figures since 2008.

This seasonal sales shift, coupled with weaker brand loyalty means that companies from most industries will have to work even harder to win back and keep lost consumers after the recovery to turn them back into repeat customers, particularly when prices begin to rise.

A U.S. March 2010 comScore ARS study found that brand loyalty has declined across many product categories since the recession began, including health and beauty aids, food, clothing and household goods. For example, from March 2008 to March 2010, the percent of respondents who said, “I bought the brand I want most” declined for the following:

  • Mouth rinse: from 61 percent in 2008 to 44 percent in 2010, a decline of 17 percentage points
  • Jeans: from 54 percent in 2008 to 39 percent in 2010, a decline of 15 percentage points
  • Laundry detergent: from 57 percent in 2008 to 47 percent in 2010, a decline of 10 percentage points

The study found that a large proportion of the change in brand purchases was driven by a shift to lower cost products, not only sale and discount items. In effect, there has been a change in consumer behavior and brand loyalty has become less and less important.

Couponing and Future Brand Research
It has become common to discuss couponing and sharing discount information is easier than ever with e-mail, texting, social networking and coupon Web sites. Contrary to the ‘spend and charge it’ mentality pre-recession, people now feel more free to share the fact that they shop at thrift stores and never forget their coupons anymore. And while the downturn has hit lower and middle class Americans most, even upper-middle class families are more conscientious about their spending on necessities and non-essentials, as consumer confidence remains low across all socio-economic classes.

This makes it an interesting time for brand loyalty research. Declines in buying preferred brands will likely persist even beyond the economic recovery, with price and value for the money outweighing brand name or image. The challenge for researchers will be to re-design brand loyalty and image research to accurately capture changing buyer behaviors.

If your brand tracking study of U.S. adults, especially lower and middle classes, shows little or no signs of diminishing during and after the downturn, chances are, a review of your study may be in order. If you are conducting brand research on buying behavior for jeans for example, you may need to add Goodwill Industries and The Salvation Army to your list of shopping places.

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