The pandemic forced brands to innovate at lightning speed. Consumer trends expected to manifest in years, were compressed into months or even weeks, as shoppers dramatically shifted preference to convenience and online options. Everything from grocery shopping to fitness to entertainment moved online and disruptive direct-to-consumer (DTC) brands reaped the rewards. The big question is, “How did that affect customer loyalty?”
As the country gears up for its grand re-opening, we’re seeing a sizeable, and we believe permanent, change in how people shop.
Consumers are taking their money elsewhere.
The pandemic dramatically affected businesses of all types, but its impact felt very different depending on the business model. Cardlytics’ data shows, before lockdowns began in 2020, 8% of consumer spend could be attributed to DTC brands. That share has jumped to 14% from March 2020 to March 2021.
Rural shoppers are spending as much as their urban counterparts.
Consider this: spend on DTC brands in rural areas now matches the spend patterns of our urban centers pre-COVID.
The rural in-store shopping experience isn’t known to be rich with options. The added layer of lockdowns during the pandemic further limited entry to traditional brick and mortar retailers and gave rise to DTC brands in rural areas. While the option to buy online isn’t necessarily new, the habits of these shoppers have changed far more rapidly than expected.
There is an urgent call to action for both traditional business as well as DTC. For the traditional business, hoping things revert to “normal” is no longer a viable strategy.
The Bottom Line:
Meet the customer’s needs on their terms, it’s more important than ever. Keep an eye out for changes in purchase behavior and consider the following questions:
- Are the number of retailers in a given category that have a share of the wallet increasing or decreasing?
- How are baskets changing value, frequency, timing of purchase, and channel of purchase, especially online vs. in-store?
- What are the changes in the channels of influence when looking at incremental return channel by channel?
- Re-assess customer loyalty and look at share of wallet for the category rather than simply frequency or amount of spend with their store alone.
- Focus on retention. Considering all the new customer growth, DTC brands must know if they’ve kept pace with competitor growth rather than benchmarking against their own revenue.
- Understand the point of true loyalty. A customer with only one purchase is more likely to be a trialist at risk of churn.
Thanks to the pandemic-led focus on health, safety and social distancing it was easy to bring customers in, but it’s vital that they don’t fall off and revert to old spending habits.