Product Availability over Brand Loyalty?

 

“No one’s a friend in distress”

As true as it feels on a personal level, no one understands this better than the big players of the FMCG brand world. In the times where some consumers are looking for brands that they can trust in terms of safety and hygiene, consumer behavior has seen some rapid transformation. At the same time non-availability of big brands on the retailers’ shelves has brought out the consumer tendency to play flirtatious with their brand switching behavior, from what holds the share of heart to what holds the share of eyes. The small and local brands have seen an upward trend in this testing time.

 

With local and small brands eating up the ‘Once upon a time” market share of big brands, we can see a major shift in consumer behavior.

 

As per reports, In January and February 2020, the three most selling brands in the hand sanitizer segment alone had a market share of 85% while others including existing players and smaller brands had only a 15% share of the market collectively. The same for the top three brands slipped to 39% in March 2020 as there was a sudden spike in demand for hand sanitizers but limited supplies when the government announced a sudden lockdown

But before we are too quick to judge the consumers, let’s dive into what lead to this decline in the market share of incumbents.

1. Loyalty, which once came out not from the transactional benefit but instead from a long-lasting relationship of shared value between the customer and the brand has now seen a radical shift to ‘what’s easily available’ amidst Covid-19 outbreak. Panic buying, Fear of unemployment, Home-stuck psychology and changing demands have dictated the consumer behavior. 
2. With an increasing supply gap and plunging demand, the market share of big brands is slowly dwindling and ultimately giving way to small and local brands. The recent scenario has proven the importance of a strategic distribution strategy to provide consumers with timely, contactless, and safe products by increased integration between the manufacturer and the distribution network. 
3. As the country went into lockdown and people cramped up inside their houses, the product stocks were also stuck in the pipeline. Friction between the upstream supply chain and downstream supply chain due to the uncoordinated operation was a casualty of the current health crisis. The retailers are readily looking for vendors who can provide them with the products of the immediate need to the consumer; here is where the efficient and locally located supply chain of small and local brands has come to the rescue.
4. With production operations put on hold and supply chain blocked, the distressed downstream i.e. wholesalers and retailers were eventually bound to look for small and local brands that already had their local supply chain system in a place to take prominence in the market.

When it comes to Brand or Availability, the former takes a back seat especially when the question of survival is at stake.

Apart from the supply chain disruptions, one thing which came to light during this period was increased customer consciousness towards local Indian brands, the switching from big incumbent brands towards going local or as we now readily say, ‘GO LOCAL’, the power brands are losing their hold on the market.

 Well for the big brands out there, the present scenario point directly towards the saying,

“When the going gets tough, the tough get going.”

But on the contrary note, many analysts feel that although market share is reducing to a certain level, brand loyalty is not easy to change within a short span, given the emotional connection with the users. As long as the brands continue providing the consumers the products through either the next door Kirana or through online retail, the consumers are likely to stay along with their preferred brand. In the end, it all comes down to how effectively the big brands can manage their production levels as well as the supply chain to ensure easy replenishment to its consumers. 

This shows how agility towards adapting to the changing environment can prove to be beneficial in the business world.

So, what do you say, in the long run, can small and local brands continue to compete with the big boys? 

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