Why Covid-19 concerns could bode well for local brand growth
One of the biggest shifts in the manufacturing and retail landscape in the last few weeks is the fact that origin matters in the age of Covid-19. Local brands and products that embody homegrown heritage and represent support for local businesses are therefore set to rise in popularity as consumers seek out trusted and transparent options.
This follows an existing trend during the past few years, that has seen consumers generally displaying strong preferences for local dairy and fresh produce brands and products versus those coming from further afield. Promoting a product’s local origins could, therefore, help manufacturers and retailers assuage some consumer concerns. In fact, a Nielsen survey on disloyalty last year found that while 46% of South African consumers mostly buy local products, 42% had no origin-based preferences, but 21% of South African consumers said they were always influenced to try or switch brands, based on local attributes, with 33% more saying they were often influenced. Against this mindset, Covid-19 could well now tip the demand scales in favour of local products. This also means locally produced products may fast become a necessity for retailers and consumers concerned about products originating from countries where novel coronavirus (Covid-19) has spread. These insights stem from an in-depth Nielsen investigation into the outbreak which found shoppers are exhibiting signs that they may steer away from products that travelled long distances with multiple human touchpoints, particularly products such as dairy, fruit, vegetables and meats. As a result, products from some of the countries hardest hit by Covid-19 could face challenges, and multinational brands will need to work to maintain consumer confidence.
Lockdown means ‘local’ may shine So what are consumers looking for? Nielsen states that firstly, they need to be reassured. More than ever, shoppers want to understand the supply chain, with complete transparency from farm to factory to distribution, and they want details of the measures being taken to assure their safety. In some countries, expanded transparency is already becoming the norm. In China, where populations are emerging from mass quarantines and widespread concerns prevail, scooter-riding couriers from online food retailers Meituan and Eleme present customers with a reassurance guarantee slip that includes details of the body temperature of the cooks, food packagers and couriers for every order, as well as their daily disinfecting routines. In other words, consumers are becoming used to this high level of transparency. They are likely to expect it in everything they buy, but especially when it comes to food products.
Smaller local manufacturers may have another advantage as consumer concerns grow as with their smaller operations, they may be able to respond faster and in more targeted ways than their bigger counterparts and by doing so could win with local consumers in an appropriate and timely way. Furthermore, big, global and known brands are holding less sway with consumers these days - one third (35%) of South African consumers say they are influenced to try or switch brands based on these halos alone. And this could further set the stage for local brands to rise and grow, cementing future loyalty through their actions of today. Global to double down on ‘local’ It is easy to assume that multinational companies face the biggest challenges as they come up against small, agile national brands, market supply constraints and local consumer perceptions. However, many global organisations have invested in-market with vigorous local sourcing criteria and manufacturing operations, often unbeknown to consumers, and they may be able to turn that to their advantage. The opportunity for these brands will lie in fortifying their positioning by providing visibility into their on-the-ground operations, supported by distinct communication around their ‘equally local’ supply status. Global quality assurances, large scale production to meet stock-up demand, verified health claims, industry body certification and track records of satisfying consumer needs could all help multinationals emphasize their origin benefits.
Depending on the duration and impact of Covid-19, there are other important implications to consider: • Retailers may be forced to increasingly depend on local products as supply from beyond country borders is suspended and longer-term quarantines implemented. • Retailers and manufacturers may want to consider additional protective packaging for global and local products but will need to balance this against rising consumer concerns about environmental impact. • Consumers may deepen their trust for locally sourced/produced products in all markets – affected and unaffected: if they can see it and identify it, they can trust it. • Local credentials will be steadily sought out and possibly over-appreciated. • Global companies will need to spotlight their global advantages together with their local elements amidst the heightened scepticism towards distance prone supply chains. Within this changed scenario, what’s clear is that life after lockdown will never be the same with consumer thoughts and actions irrevocably changed around the globe. This impact may break long time purchase habits irreversibly but it also represents an opportunity for retailers and manufacturers who are optimally placed to alleviate and deliver against consumers’ product sourcing concerns.