How COVID-19 Makes Brands More Important Than They Were Before
The great disruption of COVID-19 has made brands more important than they were before.
Consumers are paying close attention to how brands are reacting to the crisis and relying on those that live their values, exude confidence in the face of tragedy and provide solace in the wake of instability and uncertainty. Legacy brands have been front and center, but, simply because their days are so different, consumers are also discovering new brands — and no, not just new brands of alcohol. Finally, and unsurprisingly, consumers concerned about health are placing a premium on brands they trust to keep themselves, their families, and their homes safe from the virus. Across all of these themes, we see that COVID-19 is increasing the importance of brands in our lives and extending the trust we place in them.
As unemployment races to terrifying highs, certain CEOs have calmed their staffs and strengthened their reputations by pledging not to lay-off employees, at least until June. Salesforce and LinkedIn, not to mention a few top US-banks have promised similar lay-off freezes. CPG-companies like ABI and Estée Lauder have repurposed their supply chains to make hand sanitizer. As federal, state, and local governments have struggled to manage the pandemic, we observe a major opportunity for companies to step up and live the values that they hold dear, while contributing to relief in a way that benefits society, their customers, and their workers. The financial cost now of chipping in will give way to brand-benefits that enhance financial performance later. A whole decade of CSR yammering may have been just a warm-up for this real opportunity.
As an abundance of free-time and social media fascinations give life to new purchasing habits, we’re curious about who the winners are, and why. We all know that toilet paper sales are up — embarrassingly up — but less predictable categories are also booming. All of us have seen the explosion in sourdough bread-baking: King Arthur’s flour sales rose a shocking 2,000% in March, compared with the category’s sales increasing 162%.¹ The 230-year old company had embraced a digital strategy that put it at the front of the pack, but we can’t ignore the margin by which its own performance beat the market. And, it isn’t just flour that’s compelling consumers — It’s trust; it’s control. At a time where people feel like they can’t control much of anything, the trust premium increases. Baking helps you feel in control. Buying a flour brand you know and trust helps you feel even more in control. During a time when mental health afflictions are also spiking, people like to direct their own experiences, securely. A familiar brand like King Arthur can help them do just that.
But, the trust premium doesn’t just apply to categories we didn’t expect, of course. Clorox shares are up 21% as of early May.² Now famous Lysol experienced 13.5% quarterly sales growth.³ Naturally, hand-sanitizer is booming, as well, recording a sales volume increase of 300% by March, before the lock-downs even began!⁴ Even private-label brands by trusted retailers are becoming more valuable versions of their former selves: we need them more. Across all of these examples, the value we place on these products has increased relative to our pre-pandemic preferences. Furthermore, the perceived risk of buying the wrong product has also increased. So, it isn’t just that people want to buy more hand-sanitizer, or cleaning supplies. It’s really that they want to buy more of the brands they know, brands that work.
This is true across categories, whether we look at overall company reputations, niche products like KA flour, or cleaning supplies. Consumers want to know which brands can support their practical and emotional needs in the stress of the pandemic. As their standards have increased, brands have stepped in to fill the void.
² https://www.fool.com/investing/2020/05/02/to-the-surprise-of-no-one-clorox-cleaning-sales-su.aspx
³ https://adage.com/article/cmo-strategy/lysol-sales-are-surging/2253396