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									    The recession, brand loyalty and
         new brand behaviours

                                   NOVEMBER 3RD 2009
1             11/11/2009                     DEBORAH MILLS
“On average, U.S. corporations now
 lose half their customers in five
 years, half their employees in four,
 and half their investors in less
 than one.
 We seem to face a future in which
 the only business relationships will
 be opportunistic transactions
 between virtual strangers.”

     Frederick F Reichheld, “The Loyalty Effect”

                                   DEBORAH MILLS
The recession has
catalysed the need for
deeper, more
engaging brand

                         DEBORAH MILLS
                    …to create
                    true brand

...and a little bit
   of science…

                      DEBORAH MILLS
Feelings, the basis of thinking

                          Amygdala “the seat of the
                          A doorway to our lifetime of
                          likes and dislikes, memory,
                          learning and the senses
                          Amygdala damaged patients
                          lose all interest in interaction,
                          have no recognition of people
                          or feelings and find it
        Hypothalamus      impossible to make decisions

                                                 DEBORAH MILLS
MRI scans show heightened
amygdala activity amongst
brand fans

                DEBORAH MILLS
    Consumers are reining in their spending

    In the UK retail sales are still stalling
    (ONS) and a culture of thrift is

     90% claim they are making more from
     scratch/avoiding waste/buying smaller
     53% of say they are shopping more
     online because of the ability to compare
     prices (71%)
     38% shoppers in UK now download
     vouchers from internet
     +60% discount shops on UK high
     streets since 2008
                                   Source: ShopperCentric/BBC

                                                                DEBORAH MILLS
Data sourced from The Times (UK)
The Thrift Economy
In UK....

Repair services - tailors, shoes repairs,
clock repairs, electrical repairs.
Food storage eg Tupperware has
increased (top selling line in ASDA in
first half of the year)
Electricals and furniture, (ONS
reports +3.3% rise in sales for three-
month figures to the end of September-
the largest increase since June 2006)
Bikes - sales have increased reversing
an almost 30 year decline (+50% yr on
yr) (leading fashion chains including Top
Shop have launched ranges aimed at
urban cyclists)

                                            DEBORAH MILLS
    Value has new dimensions
     “Across Europe and Asia, customers see
     value as 'premium quality at a better
     To get that quality, they are bargain
     hunting more; shopping locally so as to
     save money on fuel or transport; planning
     to avoid waste.
     People still want convenience, but it is
     trumped by value. For example, more
     people are willing to cook from scratch,
     and less willing to pay for goods - such as
     grated or sliced cheese - when they feel
     they can do the job themselves.
     And consumers are still treating
     themselves so long as the treat delivers
     value - which these days might mean
     cooking a great meal at home, not going

                                   Terry Leahy,
                                     CEO Tesco

                                                   DEBORAH MILLS
Data sourced from The Times (UK)
The high street holds a clue

“ We’ve lost service culture over the last
  15 years because selling has been so
  fast; we’ve come out of a fast selling
  period and we’re going into what is a
  slow selling period, which effectively
  means that we are buying less.
 In some cases we're buying less but
 actually paying a premium and
 making things last longer.
 So it's a very different balance.”

 Mary Portas
  UK retail specialist

                                             DEBORAH MILLS
Consumers want more
59% UK consumers think that service
is worse since the recession began
78% said they would buy more where
there is great service
71% of UK shoppers said they would
complain about poor service (highest
level ever)
43% of UK shoppers claim they have
given up some of the brands they would
usually buy

                         Source: Retail Active

                                                 DEBORAH MILLS
The brand/value debate has moved on

                                  DEBORAH MILLS
Brand choice goes beyond product delivery

                       In a world where brand
                       performance is no longer an issue,
                       differentiation lies in approach,
                       tonality and attitude

                                                DEBORAH MILLS
Human to human interaction
 “Brands that start from people and
 work back are likely to be the ones
 that swim best in these social
 waters. And the truth is that people
 trust each other much more than
 they trust us - even people they’ve
 never met and never will. Whatever
 else Amazon does right or wrong, it
 knows this stuff well: it helps - on
 every product page - each of us see
 what other folk are doing, thinking
 & buying around the products
 Amazon offers.”

 Mark Earls, author “Herd”

                                        DEBORAH MILLS
Sainsbury vs Tesco in UK

                           DEBORAH MILLS
How “reframing” value has made a
difference at the bottom line

Sainsbury market share 16.3%

Tesco market share 30.4%

                                   DEBORAH MILLS
Sainsbury are turning the tables

                        Tesco has reported slower
                        underlying UK sales growth than
                        rival Sainsbury for the fifth quarter
                        in a row this week
                        Sainsbury has announced massive
                        expansion plans through 2011 based
                        on their strongest trading
                        performance in 20 years (+7.8%
                        growth vs Tesco in UK (+4.3%)*

                                      *Like for like sales last 3m

                                                     DEBORAH MILLS
   "This trading form puts Tesco's lack
lustre showing into sharp relief: it's clear
     that customers are defecting to
Sainsbury's and investors' money should
               follow suit”

        Jonathan Pritchard, Oriel Securities

                                               DEBORAH MILLS

Smart shopping not trading down

                                  DEBORAH MILLS
Feeling good about spending less

                                   DEBORAH MILLS
Sainsbury Advert

                   DEBORAH MILLS
Tesco Advert

               DEBORAH MILLS
Acknowledging real shopping habits

                                     DEBORAH MILLS
Hyundai Advert

                 DEBORAH MILLS
Revelling in disposable fashion

                             2nd half sales 2009 +9%
                            Expansion in Germany and
                              Portugal, Spain and UK


                          "People used to think cheap meant
                           cheap and nasty but the quality has
                          improved massively and people trust
                           value products in a way they never
                          did before. The current recession has
                                    accelerated that."

                            John Bason, AB Foods' finance

                                                 DEBORAH MILLS
“Emotions are important
    determinants of
  economic behaviour,
 more than rationality”

 Dr Daniel Kahneman, Nobel
 Laureate in Economics, 2002

                               DEBORAH MILLS

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