By John Bajorek
The state of the industry can be summarized in one word: Reformation. Consumer preference is shifting faster than we can say “Hey Alexa”, brand awareness is rapidly eroding, and the market is being dominated by niche brands birthed from the ecommerce and social media boom. And to top it all off, we are truly in the midst of a mass exodus towards online shopping; by 2040, nearly 95% of all purchases will take place on ecommerce channels.1 But despite this online affinity and the fact that brick-mortar retailers closed around 7,000 stores in 2018,2 not all hope is lost for traditional brands. They have existing consumer bases and a wealth of data that even the most established start-ups couldn’t compete with. And now, both of these players are vying for consumers’ attention.
What is the Good, the Bad, and the Ugly?
Older consumers are still interested in maintaining loyalty with legacy brands, but the fact of the matter is that younger generations are overtaking their purchasing power and doing so with a whole new set of shopping preferences (and start-up retailers). So, we created the Good, the Bad, and the Ugly to find out which brands are sinking and swimming in this time of unparalleled change. Our third annual report evaluates which brands are dominating the new consumer market (the Good), which brands are barely getting by (the Bad), and which will flatline soon if they don’t make some big changes (the Ugly). We weighed data from 2017, 2018, and 2019 in order to identify year-over-year industry trends with 100 brands, 92 of which were featured in last year’s study.
Over the past three years, we have polled over 11,000 consumers with incomes over $35,000 across the United States to evaluate 100 of the most well-known brands in retail today. The questions we asked our respondents were simple:
- Which of the following retailers are you aware of?
- Considering each of the retail brands you are aware of, please rate them as:
- Name any retailer that serves you and its customers the Best/Worst. Then share some of your thoughts on what makes this retailer the Best/Worst.
In this year’s study, it became evident that we needed to implement tighter generational dividers in order to gain a deeper insight into how each demographic behaves, and how they feel about brands based upon that. We all know that generations are becoming more divided than ever (re: “Ok Boomer”), so instead of splitting consumers into Digital Natives and Digital Immigrants as we have done in the past, we segmented this year’s report into five traditional demographics based on birthyear.
By using these generational markers, we are able to more closely pinpoint over-arching themes in behavior that would have not been seen otherwise.
The Good and the Ugly of 2019
This year, our respondents made it abundantly clear that becoming consumer-centric is the way to succeed, especially with younger cohorts. They want what they want how they want it and are definitely not afraid to let retailers know, ultimately pushing them to evolve in the face of impending irrelevancy. And 2019 showed which brands were truly willing to go that extra mile to keep their consumers (and their profits) around. The box and drug verticals were the best performing in the study, and the Good list shows why. Our regular top performers—Amazon, Walmart, The Home Depot, and Target—ran the Good list this year despite the fact that all of their Good ratings have decreased since our last study. Costco is the only top 15 Good brand that managed to strengthen its positive position; along with Aldi, they are making big moves on the Good list on account of their growing consumer appeal. The box and drug verticals were the best performing in the study, and it is evident why based upon the Good list.
The Ugly brands’ outlook is definitely not as rosy. Consumers found the brands on this list to be lacking in terms of customer service, price, quality, and employees; sure enough, brands in our worst performing vertical (specialty retail) were found to be struggling in these areas. 10 out of our 15 Ugliest brands sit in specialty retail and are closely followed by falling financial players, which just so happens to be our second worst performing vertical in the study.
The Best and the Worst of 2019
Unsurprisingly, Amazon dominated our Best list for the third year in a row, being trailed by its big box counterparts. When categorizing these brands, consumers used words like prices, customer, great, quality, and service—all areas in which Amazon, Walmart, and Target are thriving.
The Worst list, on the other hand, saw some unexpected guests; Walmart took the lead as the Worst brand in our study despite being one of the Best. In fact, Target, Macy’s, Kohl’s AND Amazon all can be found on both the Best and Worst lists, showing that consumers really don’t know how they feel about these brands overall. When asked what makes a Worst brand, respondents had customer service and employees at the top of their list.
The Generation Game
With more stringent generational divides comes more contrasting consumer opinions, and our cohorts had no problem telling us which brands they felt serve them best. Each generation’s top five retailers, no matter their age, are known for either low prices, exemplary customer service, or both. And (spoiler alert) Amazon topped every single generation’s list of the top Good brands. But when it comes to which brands each generation finds to be the Ugliest, we were interested to see that around 75% of the brands on their lists are traditionally Millennial. This begs the question: are consumers’ negative opinions of Millennials spilling over into brand sentiment?
Our findings this year ultimately showed that in order for brands to continue garnering positive public perceptions, they need to meet consumers where they are most—the internet. Ecommerce brands are now taking up a huge portion of market share, and traditional retailers that have implemented online offerings like BOPIS that marry their physical and digital spaces are seeing success. With so many new players joining the retail game, general brand awareness is beginning to erode as social media shopping has brought smaller brands into the limelight.
Younger generations are driving this change as they begin to become bigger spenders than their older counterparts and carefully choose brands based upon their values (like environmental and sociological impact). Will they continue to change the industry as we know it, or will legacy retailers make a comeback next year and bring young consumers back into their stores? I guess you’ll have to stay tuned and prepare for our fourth annual study (by reading this one!) to find out!
Download the full report (for free!) to see the complete list and rankings of all 100 brands as well as our deep dive into the findings and implications for the state of retail in 2020.