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Consumer Loyalty in the Digital World
Consumer needs have changed radically. Companies not only have to rethink products and services, but they also must face the technological pressure to adapt to competition. Our recent Consumers Unmasked study has further revealed that the relationship between companies and consumers has changed completely. Price is still the main criteria when it comes to buying in the fashion sector — as stated by 47% of the consumers — followed by style (around 29%) and fit (26%).
Consumer Loyalty Remains an Important Variable
A quarter of consumers in our Consumers Unmasked study said that they remain loyal to the brands and retailers they like, especially when the variables of price and loyalty are correlated with each other. Leading sports fashion manufacturer adidas invests a lot in its consumer loyalty. Mario Roth, Director & Delivery Lead Membership at adidas AG, commented: "In my opinion, the future lies in strengthening relationships with consumers and rewarding that relationship rather than focusing on transactional short-term, mostly monetary, benefits. In this way, we can get to know our consumers better.
However, the pandemic has completely changed the relationship between consumers and fashion companies once again. Often, consumer attitude and actual purchase decisions do not coincide. Although this paradox applies to all sectors, this development is particularly noticeable in the fashion sector. On the one hand, consumers expect fashion companies to live up to their social responsibility and value sustainability when it comes to purchasing decisions, but price still dominates.
Roth explains that "the upcoming generational changes will accelerate this effect, where sustainability and ethical action will be one of the cornerstones of a strong relationship between company and consumer."
Around 72% of the consumers surveyed stated that the price was more important than, for example, sustainability aspects for the purchase decision. This means that, in terms of ethics, the actions of consumers do not match with their purchase decision.
Ben Bach, VP of CPG & Retail, DACH, at EPAM Continuum, says: "What has surprised us the most is the increasing importance of brand communities. Around 61% of respondents want to be part of a brand community; part of a community with purpose and value."
Although brand ethics is not yet a decisive factor, it still seems to be reflected in the purchase decision. For example, 33% of respondents said they would drop a brand if that brand performed poorly in terms of workers' rights. Twenty-two percent would avoid brands that do not have sustainable supply chains. And the companies? They react: H&M and Ikea, for example, have already firmly anchored sustainability aspects in their brand cores. But the pandemic has expanded all this in many aspects.
Bach comments: "Let's take the example of sports fashion providers: With the closure of gyms, sports fields or other community-promoting areas, sports fashion brands had to rethink quickly. While the demand for sportswear was high, this was not enough exclusively to create brand loyalty."
Market Situation & Brand Attributions Using adidas as an Example
Brands have acquired a corresponding reputation in different markets, which can vary considerably from country to country or even continent to continent. adidas is a good example of consumers having a positive attitude toward the brand. Our survey respondents stated that adidas not only designs good products that fit well and are perfect for sporting activities, but also that the products are very durable and that the brand attaches great importance to sustainability. Among other things, respondents stated that adidas is decidedly committed to the avoidance of plastic in the product and all this with appropriate consumer-friendly pricing.
Loyalty is Not a One-Way Street
Bach says: "Loyalty is not a one-way street. It is important to constantly find new channels to bind more consumers to the brand. Of course, in times of lockdowns and pandemic measures, brick-and-mortar retail were hit hard, but perhaps this would also be taken as an opportunity to think about the importance and significance of physical stores. But even beyond these channels, the metaverse and Web3, for example, have great potential to build brand loyalty and here we are already actively supporting fashion in the implementation of this goal. Because loyalty is neither a one-way street nor a one-sided form of communication."
Are you interested to know how consumers are changing as we come out of the pandemic, what are regional differences between the U.S., Germany and the U.K. and how consumer behaviour affects other areas of consumption? Do you want to know what fashion brands will do in the future to further increase consumer loyalty and what role physical stores will play? Then read our Consumers Unmasked study here.
This blog was adapted from the original version published in German. Read the original version here.