How 2020 Forever Changed Consumer-Brand Relationships

The Covid-19 pandemic turned the world upside down in 2020, and the way consumers engage with brands was no exception. With product shortages, widespread store closures, and financial instability, brand loyalty was tested like never before as consumers prioritized essential needs.

According to McKinsey research, a staggering 75% of U.S. consumers tried a new shopping behavior in 2020, and 60% expect to integrate those behaviors going forward. Globally, over 60% of consumers changed their shopping habits, motivated primarily by value, availability and convenience.

The five key consumer behavior shifts that defined 2020 have significant implications for how companies must adapt to earn loyalty in 2021 and beyond. Here‘s what changed and how brands can navigate the evolution of consumer-brand dynamics.

1. Brand Loyalty Took a Back Seat to Availability

In March 2020, the early days of the pandemic triggered panic-buying and stockpiling behavior that led to shortages of essential items like toilet paper, cleaning supplies and nonperishable food. Suddenly unable to find their preferred products on store shelves or online, consumers had no choice but to experiment with new brands.

According to a study by Ipsos, 45% of U.S. consumers were unable to find the brands they normally purchased in the early phase of the pandemic, and 72% decided to purchase a different brand rather than not buy at all. For some, this introduces the potential for these new brands to become a long-term "switch."

The brands that thrived were those that aligned with sales and marketing teams to anticipate high-demand categories, stabilize supply chains, and keep products available on shelves and online. Smaller brands were also able to attract new customers from dominant competitors that couldn‘t keep up with demand surges.

2. Value Became the Top Priority for Budget-Conscious Consumers

With millions facing job losses and economic uncertainty, consumer spending understandably became more restrained and value-driven. McKinsey found that 41% of U.S. consumers decreased their spending in 2020.

Globally, 31% plan to buy less expensive versions of products to save money. This shift from brand allegiance to hunting for bargains benefited value-based retailers like Dollar General and Aldi.

To retain increasingly budget-conscious consumers, brands must clearly communicate the value their products provide relative to competitors. Value-based messaging, strategic promotions and rewards programs can help prevent customers from trading down solely based on price.

3. Ecommerce Adoption Accelerated By Years

With non-essential brick-and-mortar stores closed and consumers spending more time at home, ecommerce experienced massive growth. McKinsey found that across most product categories, at least 10% growth occurred in brands‘ online customer base during the pandemic.

Adobe Analytics reported that total online spending in May hit $82.5 billion, up 77% year-over-year. New demographics, including older generations, came to rely on ecommerce for its convenience and safety. Over 30% of consumers expect to make more online purchases even after the pandemic.

To capitalize on the ecommerce surge, successful brands quickly scaled up their digital presence and fulfillment capabilities. Many partnered with ecommerce giants like Amazon or meal delivery apps like DoorDash. Even traditional brick-and-mortar brands had to start thinking like digital natives to survive.

4. Health and Safety Shaped Purchasing Decisions

With a public health crisis raging, it‘s no surprise that consumers became acutely attuned to health and safety when engaging with brands. How companies treated their frontline employees, the cleanliness and contactless options of stores, and the health positioning of products all impacted brand perception and purchasing intent.

Brands that demonstrated genuine empathy and care for their stakeholders earned goodwill. For example, companies like Target and Walmart implemented extra cleaning procedures, social distancing, and special shopping hours for high-risk populations. Beauty brands like L‘Oreal and Estee Lauder pivoted to produce hand sanitizer.

Highlighting health and safety measures in messaging reinforces that brands are prioritizing their customers‘ wellbeing. Backing up words with meaningful actions proves that the sentiment is more than just marketing.

5. Consumers Embraced Nesting at Home

With travel plans cancelled and social events limited, consumers spent significantly more time at home in 2020. According to McKinsey, 70% of consumers across the globe don‘t expect to resume "normal" out-of-home activities even after government restrictions are lifted.

This homebody economy drove increased spending on categories like home office equipment, kitchen appliances, entertainment, and hobbies. To reach these nested consumers, brands had to get creative with engaging virtual offerings.

Peloton and Mirror saw surges in at-home fitness equipment purchases. Restaurants pivoted to takeout and meal kit options. Museums offered virtual tours. Online courses and webinars replaced in-person events. Finding innovative ways to bring the customer experience into consumers‘ living rooms became a key differentiator.

2021 and Beyond: Value, Digital and "Human" Brands Will Define the Future

While 2020 accelerated shifts in consumer behavior that were already underway, the changes are expected to shape brand dynamics for the foreseeable future. McKinsey found that over 75% of consumers who tried a new behavior plan to stick with it beyond the crisis.

To earn post-pandemic loyalty, brands will need to prove their value proposition, invest in digital transformation, and lead with empathy and purpose. Consumers will choose brands that consistently demonstrate customer-centricity in every interaction.

Value doesn‘t just mean lowest prices, but a superior combination of price, quality, and service. With the rise of ecommerce, seamless digital experiences across platforms will become table stakes. Perhaps most importantly, brands will need to operate with transparency and humanity to build trust with socially-conscious consumers.

The brands that adapt to these evolving consumer needs and behaviors will emerge from the pandemic with stronger customer relationships and resilience to withstand future disruption. After the historic events of 2020, the only certainty is change. Thriving in the next era will require a commitment to bold innovation and customer obsession.