IP Information & News

Why protecting your brands is more important than ever [PART 1]

Gareth Price

By Gareth Price

Partner

The Covid-19 pandemic has changed the world. Whilst we hope that many of these changes, such as lockdowns and restrictions on the freedom of personal movement, will be for the short term, some are likely to be more fundamental and affect our lives and businesses for many years to come.

In this series of blogs we look at changes in consumer behaviours and why brand owners need to ensure that their brand protection strategy is agile and able to respond to the changing world.

Consumer Behaviour

The daily lives of consumers around the world have changed in ways that would have been unrecognisable at the start of 2020. Consumer behaviours are always evolving but Covid-19 has accelerated that evolution to what some may describe as a revolution.

The growth of the popularity of online shopping has been gradual over recent times but with the closure of physical stores - in some countries overnight - consumers have been pushed online to satisfy their needs, in the case of essential items, and desires, in the case of discretionary items.

Panic & Stockpile

Leading up to and in the immediate aftermath of the lockdown announcement in the UK, many consumers chose to panic buy and stockpile essential items. This led to images of supermarkets with empty shelves being broadcast around the world and consumers reporting how difficult it was to book grocery delivery slots.

According to ContentSquare by 19 March 2020 (roughly the third week of the pandemic) the number of ecommerce transactions with supermarkets was up 57% against January 2020. Similarly other sectors saw increases in the number of ecommerce transactions, for example healthcare retailers (up 17%), banks and insurance providers (up 45%) and online marketplaces (up 15%)..

Anecdotally, the online toilet paper retail business Who Gives A Crap issued a blog on 20 March stating that they had sold out of all its products (a situation which in May 2020 is only now starting to improve).

In contrast, the hardest hit industries were discretionary items such tourism (down 42%), luxury brands (down 21%), fashion (down 25%) and jewellery and watches (down 23%).

Adapt

The ‘panic & stockpile’ period did not last long and by 25 March 2020 it was clear that consumers had started to settle into lockdown and online discretionary spending quickly came back on-stream, particularly in the areas of cosmetics (up 30%), healthcare retail (up 20%), technology retail (up 48%) and sports equipment (up 11%). Many consumers now own products that they never thought they would buy - gym equipment and hair clippers being two of the most common in the UK.

Around this time, there was a large spike in the amount of online and digital content being consumed globally. In the UK, whether that was online PE lessons with Joe Wicks which reported more than 1 million new subscribers and 23 million views in a week or the launch of the Disney+ streaming service on 24 March.

Whilst consumers were now increasing their discretionary spend, there continued to be a downward turn for tourism (down 81%), luxury brands (down 35%), fashion (down 25%) and jewellery and watches (down 46%).

The New Normal?

As we approach the 10th week of lockdown, more and more traditional retailers have invested in developing and/or improving their website and ecommerce solutions. Consumers appear to be shifting towards a more normal level of discretionary spending albeit now almost exclusively online. This has led to positive trends in the home and DIY sector (up 115% on January 2020), cosmetics (up 75%), technology (up 84%), sports equipment (up 94%) and fashion (up 63%).

The hardest hit industry continues to be tourism with a 90% decline in online traffic compared to January 2020. For businesses in this sector they will be hoping that governments can at least indicate when lockdown may end so that consumers can start to, at least, plan travel and trips even if international travel may be some way away.

Conclusion

Whilst consumers undoubtedly enjoy the act of shopping in physical stores, it is clear that online shopping is growing and is here to stay. The retailers who have reportedly done well out of the pandemic are those that already had well-established online stores and distribution, think the likes of Amazon and, in the UK, supermarkets such as Sainsbury and Tesco. But with the growth of online retailing and shift in consumer behaviours, brands will face greater risks which we explore in the next blog.

To discuss your brand protection strategy, get in touch with me at gip@udl.co.uk

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