From the outset of COVID-19, the vast majority of governments and businesses have been clear that they plan issues to put people ahead of profits. And, as companies around the world moved to retool their business models to support government response requirements, it quickly became clear that brands were already being judged by their actions and their purpose.
The upheaval only accelerated a trend that was already well underway. Consider this: according to a study by Edelman in late 2018, nearly two-thirds of consumers around the world said they would decide to either buy or boycott a brand based solely on its position on a social or political issue.
Company results further reinforce the importance of purpose. Brands that demonstrated a positive impact on people’s lives grew 2.5 times more (over a 12 year period) than brands with a low perceived impact. A further report backlashes shows that ‘meaningful’ brands also generate higher returns on their KPIs — almost three times the purchase intent more than double the repurchase intent in existing customers. Not surprisingly, meaningful brands outperformed the stock market by 134 percent.
What COVID-19 has demonstrated is that customers want businesses to stand for something bigger than just the products they sell or the dividends they return to their shareholders. They expect the retailers they purchase from to reflect their values and to care about the same societal issues they do. And COVID-19 has given retailers ample opportunity to demonstrate their purpose.
This year, expect to see retailers start to focus on improving transparency across the entirety of their business. Particular focus, not surprisingly, will be on those that help society respond and recover to the current health troubles. Those going the extra mile to support their customers and their employees through this challenge will undoubtedly come out the other side with greater brand loyalty.
That being said, customers expect their brands to do more than just talk a good talk. According to the Meaningful Brands survey, only around 38 percent of consumers think companies and brands currently communicate honestly about their commitments and promises. Recent backlashes against perceived instances of corporate ‘green washing’ suggest that consumers are setting a rather high bar for retailers to pass.
In 2020, expect to see the leading retailers move from having a purposeful brand promise to using their purpose as a guiding growth principle and decision-making lens. Simply put, smart retailers will use this critical period as a way to demonstrate that they live their purpose rather than just talking about it.
Journey to becoming purpose led
The excerpt was taken from KPMG article, Global retail trends 2020: Preparing for the new reality.
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