New generations have grown up with the internet and social media as an integral part of their daily lives and are more likely to express a strong interest in social engagement, purpose and values than their predecessors. The disruption that Covid-19 has wrought across the globe also seems to have strengthened the demand for a more sustainable approach.
A mindset of what has been dubbed agile long-termism is needed in this ‘brand’ new world. For consumer brands that means remaining resolutely focused on long-term vision and values, while being more tactical and nimble in response to the changing patterns of consumer behaviour. This shift presents both challenges and opportunities for traditional brands, and therefore for charities who are likely to have significant investments in these companies, as we look ahead to the post-pandemic world.
Brand champions
Companies selling branded goods are under threat in this brave new world of mobile internet, where information on product quality and supply chains can be easily conveyed through user reviews. What can the incumbents do to remain relevant and stop the erosion of their brands?
We believe these companies can continue to thrive, but only if they make significant efforts to be agile and innovative, and demonstrate genuine commitment to sustainable business practices. Brand values must be clear and authentic, while companies need to understand what consumers want and how their tastes are evolving. It will mean engaging with customers in radically new ways.
The threat is especially acute for companies with long-established brands, painstakingly built and maintained over decades, which used to command consistent loyalty and predictable consumer demand. These global ‘brand champions’ are key parts of portfolios and economies, so what happens to them is important for all investors.
The emerging new generation of consumers are more aware of the world’s challenges and have a sense of collective responsibility as global citizens to deal with them. In their own words, they are ‘woke’ and they actively use social media to promote causes and instigate change.
While this approach is sometimes derided as ineffectual or ‘slacktivism’, there are numerous examples of movements begun through social media that have galvanised public opinion in order to effect fundamental social change, Black Lives Matter being a striking example.
Brand loyalty
There is much talk, and some evidence, that the new generation of consumers are less loyal to brands than their parents and grandparents. This shift may be due to their exposure to alternative options through their time spent online, and a greater willingness to try new brands in the hope of getting a better customer experience or a cheaper price.
There is also growing mistrust of institutions, government and the media, as measured by the Edelman Trust Barometer. The 2020 survey shows that a majority of the population don’t trust the institutions it tracks. This makes younger generations less willing to defer to the judgement and brands of their elders and the companies whose television adverts they remember growing up with.
In Edelman’s latest survey, more than half of the respondents globally believe that capitalism in its current form is doing more harm than good. This makes consumers more likely to mistrust big business and prefer to support smaller businesses or brands — or at least those that seem smaller and more authentic.
Consumers are increasingly willing to support, and often pay a premium for, brands which have a clear sustainable ethos and are seeking to help solve environmental or social problems. Younger generations in particular appear to be willing to sacrifice a reasonable degree of data privacy in order to be able to enjoy a more personalised service or brand experience tailored to what matters most to them.
The pandemic has highlighted the weaknesses of the old way of doing things. Yet it could also be a catalyst for accelerating the move towards a more responsible capitalism, and an opportunity for companies, and the charity endowments that invest in them, to help build a more sustainable future.
Andrew Pitt is head of charities – London, Rathbones
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