Are consumers being pushed to breaking point by greedflation?
Editor’s note: Sam Killip is VP of customer success at consumer research platform Attest London.
The tough economic climate has had a profound effect on consumer behavior. With shoppers already turning away from household name goods and favoring private brands, it's a tricky time to be a brand marketer.
The inflation figures may relieve weary marketers struggling with constrained budgets and the cost-of-living crisis. However, they shouldn't get too complacent. New research reveals that brand loyalty is at risk, with consumers unhappy over perceived 'greedflation’ at the same time cost savings is at the front and center.
Attest's latest research shows that 88% of Americans are prepared to switch from their favored brands to save money. Further, many brands are being affected by a loss of customer trust, with 80% of consumers believing that brands are using inflation as an excuse to raise prices.
Prices are rising, and consumers see grocery brands as most extreme
Three-quarters (75%) of consumers think that price rises have been most extreme in the food and beverage sector. This perception is reflected in the statistic that 71% of respondents were most likely to switch grocery brands.
While Americans also cited price rises in the energy and travel sectors as a concern, 40% said they were ready to change clothing and footwear brands to save money. At the other end of the scale, categories such as tobacco and alcohol seem to have escaped the brand loyalty crisis. Steadfast brand loyalty for such “vice” products means that only 16% would make a switch. When it comes to the product that sees the lowest rate of change and highest brand loyalty, financial service providers clocked in at just 14%.
The message for marketers is clear: you must understand and deeply consider consumer sentiment when setting prices. Businesses in some sectors are more at risk than others, but those with the lowest levels of brand loyalty should be especially wary.
Yes, consumers value transparency during brand crises
The research also revealed that consumers are quick to act against brands that get caught up in public controversies. Brands that slip up can expect an instant response, with 26% of respondents saying they would boycott an errant brand “immediately.”
Meanwhile, 15% would take to social media to air their displeasure or unfollow the brand in question, according to the report. Most respondents (35%), though, would wait until the brand had a chance to issue a response before deciding how to react.
What brand controversies are most likely to upset American consumers?
The issue that is most likely to upset Americans regarding a brand controversy is accusations of racism, with 42% rating this as their top concern. Following this, other types of discriminatory behavior also came high up the list, along with poor treatment of employees. Politics is a thorny issue, with over one-quarter of consumers (27%) worried about brands airing partisan views.
In terms of forgiveness, 13% said they would either be 'unlikely' or 'very unlikely' to pardon a brand that had made a public mistake – a potentially surprising and comforting statistic for brands on the mend. While 43% said they were 'neither likely nor unlikely' to forgive a brand, the same proportion said they would either be 'likely' or 'very likely' to pardon a brand after a scandal.
So how should brands react if they make a misstep? Well, transparency is the key, according to the research. Over half (55%) of Americans want brands to be accountable for their actions, providing clarity on what exactly went wrong and how they plan to fix the problem. Some 42% said they would be happy with a public apology, while nearly one-third (32%) felt that the person responsible should be removed from their role.
Prevention is better than cure, though. Brands that understand the issues that their customers care about – and which ones are a turn-off – will be in a better position to avoid a scandal in the first place. Regular consumer research can help brands measure consumer sentiment.
Is brand loyalty at its breaking point?
Inflation has pushed Americans to breaking point and called into question some long-held beliefs about consumer behavior. Loyalty is not a given, and with a wide majority believing they’re suffering the effects of greedflation, brands must be careful. Nearly a third of consumers will simply give up on a brand that raises costs.
In this tough economic environment where consumers’ loyalty is more fleeting than ever before, brands need to make sure they don't make high-profile mistakes. The need for marketers to closely gauge consumer sentiment and use reliable data to inform all their decisions has never been greater. It's simply not OK to guess what consumers are thinking.
Methodology
All figures within this article are taken from research conducted on the Attest platform. The total sample size for this research was 2,000 nationally representative working-age consumers based in the United States. The survey concluded on February 15, 2023.