Amidst the outbreak of the deadly Coronavirus disease (COVID-19), there is one aspect of our daily lives that has been hit in a unique way. As people become more anxious by the day, fearing for the safety and health of themselves and their loved ones, brand loyalty towards FMCG goods, ones that are needs the most right now, has surely gone for a toss.
Reports of hoarding and siege of convenience stores are not new, as most customers are now keeping stockpiles of everyday goods in preparation for a prolonged period of lockdown. What this has done is that it has created scarcity of the usual branded products that you may have been using all this while. And since manufacturing has also slowed down due to the pandemic, the new stock is also unlikely to come by.
Owing to this, people have started ditching their usual brand of daily FMCG products, and are opting for those that are readily available instead. In fact, regional FMCG brands are seemingly outdoing market leaders, mostly because of their flexible supply chains, according to multiple media reports. And since people are now buying whatever is available, brand loyalty has weakened. Some of the top most names in categories such as aata, rice, edible oil, pulses, home products, have lost almost 15% to 20% market share.
And there’s ample data to back this up. According to a McKinsey study, two-thirds of consumers have tried alternatives during the lockdown, and 10% of them don’t intend to go back to their original choice. Another Nielsen study shows that market share of the top three hand sanitiser brands fell from 85% in February to 39% in March as 152 new players entered the segment. In addition to this, share of top three packaged rice brands in modern trade fell from 72% in February to 64% in March, while 65% grocers and 33% chemists are sourcing products from wholesalers at higher rates.
Does this pose a risk to the meticulously created brand image of the biggest FMCG behemoths in the country? Most definitely. The way dynamics have been reversed during this pandemic has unveiled new layers of consumer behaviour that we haven’t seen before. Especially with social distancing and time restrictions on how long a consumer can stand at a shop to buy products, this becomes even more pronounced. So, if one shop runs out of your favourite rice brand because you were too far behind in the line, you won’t go back without buying rice, will you? Instead, you will probably ask to see another brand. That is what is happening in grocery shops across the country right now. Brand loyalty loses its charm right there and then.
Many will argue that this is a short-term thing. But if the situation persists, and a consumer starts to like the alternate brand that they have been using for two months or more, they might even switch their loyalties. It will be a big task again for the big brands to devise newer marketing strategies to attract all the consumers they have lost during this time.
It may even lead to emergence of new and innovative products in the market, alongside a drastic change in habit. Most likely, this will make competition even more tough in the future for FMCG companies. It will be interesting to watch how big companies navigate a dynamic and changing retail landscape, to compete with the emerging, and more relevant smaller companies.