The Great Resignation From Brands - Jacopo D’Alessandris
Due to the impacts of COVID-19, the workforce has seen a significant increase of workers leaving their jobs or switching their careers — a movement known as the Great Resignation. Employers are not the only ones experiencing a Great Resignation of employees; brands are also seeing a Great Resignation of consumers abandoning brands they were once loyal to. I recently read an article published in the latest McKinsey’s “Consumer Pulse” research, How US Consumers Are Feeling, Shopping, and Spending — And What It Means For Companies, which highlights how the post-COVID-19 economic restart, job changes, high inflation, and new omnichannel shopping are impacting consumer behaviors.
As restrictions from the pandemic are loosening up, companies are conflicted between sticking to the new COVID-19 era habits or going back to the old ways of operating business. Most US Consumers seem to enjoy both pre- and post-pandemic shopping habits — shopping online and going into physical stores. Despite whichever behavior consumers exhibit, it is clear that “companies must stay on top of consumers’ fast-changing attitudes and behaviors.”
Despite US inflation growing to a decade-high level at nearly 8.5% in March 2022, US consumers spent 18% more in March 2022 than they did two years earlier and 12% more than they were forecast to spend (McKinsey). Inflation has not stopped consumers from spending as “people in every age cohort and income group spent more of their money.” During the pandemic, certain categories such as sporting apparel, pet supplies, cosmetics, and software and electronics saw huge booms in sales. Due to the restrictions of the pandemic, other categories such as gasoline, restaurants, and travel saw a drop in volume of consumption.
While consumer spending reached all-time high levels during and after the pandemic, there was a huge “loyalty shake-up” where consumers began switching to different brands and retailers. Due to high levels of inflation, consumers are prioritizing value in their purchases and price is the main motivation for consumers switching to different brands. During 2020 and 2021, the height of the pandemic, availability was a major factor in purchasing decisions. While it still is important, it is less of a differentiator for consumers. In addition, “brand purpose is now less of a buying factor for consumers than it was in 2020.” A new and increasingly important buying factor for consumers now is novelty. “Consumers are keen to try something different, making innovation an imperative for brands that want to win (or win back) consumers.” Based on these new consumer trends, companies need to find a balanced combination of innovation and value to attract new customers and retain old customers.
Online spending has exponentially risen during the pandemic since consumers didn’t have much of a choice. “Contrary to what some in the industry predicted, the rise in e-commerce hasn’t made brick-and-mortar retail obsolete. Omnichannel shopping is becoming the norm. 75% of US consumers say they’re researching and purchasing both in-store and online.” Social-media influence plays a heavy role in purchases, especially among the younger generations. Social commerce is a new and increasingly popular channel that is growing in importance due to the powerful opportunities it presents to reaching and engaging more consumers. Overall, “companies would do well to differentiate the service and experience of in-person shopping, while giving consumers reasons to continue to visit their websites and apps.”
Another factor impacting purchasing decisions is ESG. Younger generations specifically, are influenced by at least one aspect of ESG and will make their purchasing decisions based on this. Older consumers also pay attention to ESG topics involving health and the environment. Due to these values of consumers, both young and old, it is critical that companies are transparent about how they are caring for people.
The pandemic has completely altered the consumer decision journey and the “companies that can deliver on consumers’ expectations for both value and values will be best positioned for success.”
You can read the original article here.
