A longing for lables returns - Top Brands 2002 - brand loyalty survey results

DSN Retailing Today, Oct 28, 2002 by Debbie Howell

Power brands reasserted themselves this past year as a reminder that in tough times consumers seek out the comfort of a reliable, known label. The headway that new labels and store brands had made in recent years dropped off somewhat as shoppers showed increasing loyalty to established brands.

While about half of shoppers were willing to switch brands if their first choice wasn't available, DSN Retailing Today's annual Top Brands survey revealed a reversal from recent years of the growing willingness by consumers to try new labels.

And, in a similar trend, receptiveness to buying a store brand or private label dropped slightly since last year's study, from 55.5% to 53.5% in corn parable categories.

"Openness to private-label brands has declined as part of the general resistance to brand switching," said George Rosenbaum, chairman of Leo J. Shapiro and Associates, which conducted the survey for DSN Retailing Today. "Given a tough economic situation, people may be less willing to take risks in trying new brands."

In fact, the survey showed stability of top-ranked brand choices. Of 16 comparable categories surveyed this year, only the Beverages category witnessed the emergence of a new leader, as Pepsi topped Coca-Cola by a mere one percentage point and continued the long-standing trend of volleying back and forth for Top Brand status on the annual DSN Retailing Today survey. By comparison, there were five out of 22 categories last year that noted new No. 1 brand preferences.

This year's survey of 900 households tabulated brand preferences in 11 categories versus 22 in 2001. Other changes in this year's survey were the pullout of candy as a separate category from last year's overall Snacks segment and the return of cosmetics as a survey category after a five-year hiatus.

Respondents were asked a series of questions based on brand preferences in each category when purchased at either a discount store or superstore. They also were surveyed for willingness to switch brands or buy a private label.

For the majority of categories, or 13 out of 17, at least half of those surveyed had a brand preference. Beverages showed the highest response, with 91% of those surveyed saying they had a favored brand, while Domestics was the least brand sensitive, with only 24% indicating a preference.

Between 38% and 43% of respondents had a preferred brand in Women's, Children's or Intimate Apparel, indicating lower brand sensitivity in soft lines. On an interesting note, though, 63% noted a brand preference in Men's Apparel, making that category the only one in soft goods to garner strong brand loyalty.

In 12 out of 17 categories, more than half of those surveyed said they would be willing to buy a private-label product if their preferred choice wasn't available. Groceries & Canned Goods was the most receptive to private-label buying, with 71% of respondents willing to purchase a store brand, while Entertainment Software showed only 33% amenable to a store brand.

But shoppers definitely retreated from interest in private label this year. Only four categories showed greater willingness this year to buy private label--Groceries & Canned Goods, Beverages, Camera and Health & Beauty Aids--with all others declining. The most significant drops in private-label receptiveness were in Film, Entertainment Software, Consumer Electronics and Toys.

Taken at face value, this finding runs counter to the logic that during a recession people will reduce spending and seek out cheaper store brands. Rosenbaum said he viewed this result as a yearning for stability in turbulent times.

That doesn't mean some private labels or proprietary brands haven't made inroads, however. Kmart's Martha Stewart Everyday label continues to gain loyalty despite the troubles of the retailer, as well as Stewart herself. The MSE label, which was identified as a Domestics brand by 13% of respondents last year, rose to 24% in the latest tally, thereby significantly closing the gap with No. 1 Cannon, which 'this year stands at 36%.

Brand loyalty was strong in this year's survey, with consumers more resistant to switching brands. In 12 categories, fewer shoppers were willing to switch this year than last. Only in Groceries and Canned Goods, Beverages and Women's Apparel have there been increases in the percentage willing to switch.

That's an about-face from last year's results, when the propensity to switch brands surfaced in 10 out of 22 categories, the highest it had been in the survey's history.

The survey showed that consumers were at least willing to switch brands in Entertainment Software, with only 32% amenable to alternate choices. A similar finding was in Consumer Electronics, in which only 40% said they would switch. At the high end in consumer willingness to try another brand were Greeting Cards, Groceries & Canned Goods and Domestics, with responses in these categories ranging from 63% to 67% willing to switch.

Further analysis of the numbers on brand loyalty yielded some interesting results. Those consumers who were most brand loyal ironically also were attracted to private label. If this seems like a contradiction, Rosenbaum interpreted the results as meaning shoppers are paying close attention to store brands to help justify their loyalty to preferred brand choices.