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Is Brand Loyalty Dead?

By Daniel B. Kline - Updated Apr 13, 2019 at 4:57PM

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Technology makes it a lot easier for consumers to shop around.

Consumers have a stunning amount of choice available when it comes to their purchasing decisions. The rise of the digital age means we're no longer tied to the stores and restaurants in our neighborhoods. In fact, you can buy nearly anything -- from clothes to cars to meals -- from your phone without ever leaving your couch.

That's good news for consumers, but bad news for brands. You may like a certain company, but get an offer for a similar product from a rival and find that the substitution works just fine. Brand loyalty has suffered, and the majority of consumers are willing to try something other than their normal go-to brands in almost every category, according to a new survey by advertising technology company Criteo.

A woman holds a phone up while in a shopping center.

Consumers can easily purchase from their phones while in a store or anywhere else. Image source: Getty Images.

There is little loyalty

Most consumers surveyed (73%) said they were willing to switch in at least one of the eight categories covered. Grocery (80%) and apparel (72%) shoppers were the most likely to be willing to consider a switch. More than 50% of respondents, however, were willing to try a new brand in every category except jewelry and luxury goods, where only 46% said they were open to a change.

These numbers suggest that consumers are generally open to making a brand switch. That means that incumbents have to work hard to keep their consumers, and upstarts -- which can include huge players going after new markets or increased market share -- have a real shot at taking them.

A chart shows how willing consumers are to make a change.

Image source: Criteo.

What are consumers basing their choices on?

Consumers don't have a single clear reason for picking brands. That means that retailers, restaurants, and other sellers have to juggle a variety of factors.

"Loyalty depends on more than just low prices," according to the Criteo report. "While respondents in our study did appreciate value and low prices, other key considerations were product selection, service, and location."

That's not to say that pricing isn't important. "Best value for money" (66%) and "lowest prices" (51%) were the two top answers given by respondents as to what gets them to go back to a brand they have purchased before. Those were followed by "best product selection" (49%), "good customer service" (40%), "convenient physical location" (38%), and "offers something I can't find anywhere else" (31%).

Only 29% said they stay loyal due to being able to earn rewards points, and just over half (51%) of those surveyed said a brand's values impact their buying decision. One in six said they had stopped buying a brand because its values did not match their personal beliefs.

Check out the latest earnings call transcripts for the companies we cover.

Competition is everywhere

Consumers are up for grabs, and brands face challenges to their loyalty on an ongoing basis. That's an opportunity for consumers, but it's a power that should be wielded with some caution.

If, for example, you only make select purchases at your neighborhood grocery store to save a few pennies, that store may not remain viable. As a consumer, it's important to weigh the entire shopping puzzle -- and while price is a factor, it's only one piece.

For brands and retailers to survive, they need to operate as if the customer will literally buy from someone else while standing in their store. It's a market that forces sellers to work harder, because in many cases loyalty is temporary and easily lost.

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