Brand owners facing "new world order"

BOSTON: Brand owners face a "new world order" in which their customers have redefined notions of value and are placing different demands on the products they buy, a study has argued.

The Boston Consulting Group conducted a survey of 12,057 people in 14 nations, including Brazil, China, Germany, India, Japan, Russia, the UK and US.

It found that while many shoppers thought there was room for optimism in 2010, overall anxiety levels were considerably higher than in the spring of 2007, before the recession had begun to bite.

According to BCG's poll, 46% of participants in the US were planning to implement drastic cutbacks in their expenditure, a contraction on the figure of 73% posted in an equivalent piece of research in Q1 2009.

Some 41% of respondents in Europe's five biggest economies intended to follow this course of action, down from 63% year-on-year.

Non-essential items will bear the brunt of this austerity, with 65% of Americans trimming their outlay on discretionary purchases, down from the 81% doing the same 12 months ago.

However, only 26% of Chinese contributors and 24% of their Russian counterparts were hoping to take similar steps.

Uncertainty may be driving certain popular trends, but BCG suggested the financial crisis has served to exacerbate a variety of other discernable shifts.

Home and family, saving for the future and the environment are now among the major priorities in the lives of many individuals, while luxury has diminished rapidly in significance.

The fact that around 47% of US consumers and 40% of their Japanese peers continue to distrust big business could be a further reflection of this return to basic values.

Yet in certain emerging countries, status is still important. More than 35% of the sample in China expressed a desire to “trade up”, a total that stood at 13% in Europe and 18% in the US.

An interest in eco-friendly goods and services was a characteristic of all the markets covered, but the cost of buying organic food or fairtrade clothing has also become more important.

Less positively, confusion was widespread about what constitutes a “green” brand and suspicion about exaggerated environmental claims was commonplace.

In terms of securing low prices, the top tactic for American shoppers was spending greater amounts of time in stores.

Two-thirds of Americans expected to pay frequent visits to discount outlets this year, and 74% believed they would browse for longer in a bid to get the best possible deal.

In Europe and Canada, 66% of the panel favoured pursuing this strategy, although 59% of the Japanese cohort did not want to take part in this activity.

Preferences for private label products have remained consistent across the globe in the past year, BCG's report added.

Over 60% of Americans have more regularly opted for own-label goods in the last 12 months, with Japanese customers on 49% and Europeans on 45%.

As consumers everywhere have discovered that switching offers substantial cost benefits, BCG predicted store brands will prevail at the expense of premium alternatives – for the short term at least.

Data sourced from Boston Consulting Group; additional content by Warc staff , 6 July 2010

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