So Your Customers Tried a Competitor During Quarantine—What Now?

Loyalty’s up for grabs, but savvy brands can regain lost ground

Customers are trying new brands at a time when at-home consumption is up overall. Getty Images
Headshot of Lisa Lacy

Key insights:

As U.S. consumers transitioned from the panic-buying to hoarding phases of product acquisition during the coronavirus pandemic, longstanding consumer habits and brand loyalty took a backseat to availability and circumstance.

In fact, a recent study from media and marketing services company Mindshare found 69% of consumers said they’re likely to buy or have bought new brands since the outbreak began.

"Challengers are taking innovative steps to serve their customers where they are."
—Simon Poulton, vp of digital intelligence, Wpromote

For some brands, like bamboo toilet paper No. 2, it’s an opportunity to distinguish themselves in a sea of bigger, better-capitalized competitors.

But does a one-time customer switch translate to long-term brand loyalty?

According to Mindshare, 67% of consumers said they’d miss the brands they used to buy, but 66% were likely to continue buying those new brands after the pandemic is over.

Challenger brands’ opportunity to shine

Such stats should certainly be music to the ears of challenger brands everywhere.

Simon Poulton, vice president of digital intelligence at digital marketing agency Wpromote, agreed there’s an opportunity for smaller brands to steal market share now.

For starters, there’s lower overall acquisition and retention costs than prior to Covid-19, as Facebook CPMs and Google CPCs are down significantly year-over-year.

But, he said, challenger brands also have an opportunity to retain new customers by adapting their products and delivery services to align with new consumer behaviors. That includes bars offering cocktails to go and craft breweries pivoting to contactless delivery. (It also likely includes PepsiCo’s launch of Snacks.com as a direct-to-consumer sales channel and the development of products like Taco Bell’s At-Home Taco Bar, although we’d have to loosen the definition of “challenger brands” significantly to include PepsiCo and Taco Bell here.)

“Challengers are taking innovative steps to serve their customers where they are and overcoming the friction that is typically associated with trying a novel product, in this case at home,” Poulton added.

Established brands have to communicate

But that’s not to say supply issues during a global pandemic will devastate familiar household brands.

Instead, Jeff Malmad, executive director of Shop+, a Mindshare unit focused on retail and ecommerce media, said these brands have to rethink their media buys.

"You don’t want to just turn off all your advertising. Because when your products do go back into store or online, you want your brand to stay top of mind for consumers.”
—Jeff Malmad, executive director, Shop+

“On the one hand, you don’t want direct response messaging leading to retail sites where your product isn’t available—that’s just going to frustrate consumers,” he said. “But at the same time, you don’t want to just turn off all your advertising. Because when your products do go back into store or online, you want your brand to stay top of mind for consumers.”

This, Malmad said, means leaning into upper-funnel tactics, like video, display and sponsored content to generate awareness. It also includes incorporating geo-location into campaigns so your target audience sees appropriate messaging based on supply or where states are re-opening. And, of course, expect to see media buys renegotiated where appropriate.

“Whether they’re searching online or just going to the store, you still need to have brand equity so that they’re not just switching to a competitor’s products in the long term,” Malmad said.

Everyone is consuming more at home

While product scarcity was certainly an issue for major brands—and an opportunity for challengers early in quarantine—some say supply has largely recovered.

According to K.K. Davey, president of strategic analytics at market research company IRI Worldwide, said IRI’s CPG clients are focused on getting products on store shelves and are prioritizing popular items while reducing assortment complexity in high out-of-stock categories like hand sanitizers and wipes. And, Davey said, while there may have been some brand substitutions in March due to availability, he estimates 80 to 85% of supply is now available.

Meanwhile, he said, brands are seeing “unprecedented” demand due to an increase in at-home consumption—with lift of as much as 25 to 35% for CPG overall.

“[Consumers] are eating three meals a day and having all snacks and breakfast at home and using all the related stuff like food containers, foil and toilet paper,” Davey added. “They are using all that at home as opposed to at work, dorms, airports, hotels, etc.”

And that, Davey said, means CPG brands across the board are welcoming new customers—and have cause for celebration.

“All major brands have seen anywhere from 500,000 to 5 [million] new buyers in the past month or two enter their franchise,” Davey added. “Some have lost a fraction of their loyal buyers, too, but net-net, there is a number of new buyers who have entered many brands.”

An uncertain timeline

Now brands have to figure out how to retain new customers and turn them into long-term buyers who reach for brands out of habit.

“Covid-19 gave you a blessing—a whole slew of new buyers,” Davey said. “Now the challenge is to take this penetration increase and retain it and grow brand and share of the category.”

This, Davey said, comes from messaging that communicates value, such as highlighting the benefits of how given products can be used in meal solutions.

“We're likely to see new brands pop up to fill market needs and find that none of the existing brands in a certain space are able to adapt to the future.”
—Simon Poulton, vp of digital intelligence, Wpromote

There will inevitably be some drop-off as the economy reopens and out-of-home consumption increases. But that, too, will take some time.

“Even in China, all the restaurants that have reopened are running at 30% capacity or so—they are not going back to resuming normal activities,” Davey added. “It’s at least a few quarters if not a year or so before we’re close to what we used to do before.”

Look at professional sports, for example. Davey said it’s unlikely fans will be back in stadiums eating peanuts and Cracker Jack anytime soon—but they may very well watch and eat game-time snacks from home.

Poulton, however, said long-term impact is still hard to determine.

“The reality is there are so many market factors that go into this, like supply chain geography or ongoing stay-at-home orders that limit economic recovery,” he said. “We’re likely to see new brands pop up to fill market needs and find that none of the existing brands in a certain space are able to adapt to the future.”

Poulton likened the latter to Netflix, which didn’t just kill off Blockbuster, but the entire industry of physical media rental.

“While these are natural processes during non-pandemic times, it’s likely the pandemic is going to accelerate change and turbulence making the future of brand loyalty very hard to predict,” he added.


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@lisalacy lisa.lacy@adweek.com Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.
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