Nestlé’s direct-to-consumer sales strategy, beginning in Spain this week, could be an opportunity for the brand to profit from lockdown and pre-empt future market disruptions, allowing the company to sell its products without the influence of retailer relationships. If the move is successful, other brands may also follow suit as providing convenience during the pandemic could boost customer loyalty, helping to retain those shoppers in a post-COVID-19 future, says GlobalData, a leading data and analytics company.
According to the GlobalData’s COVID-19 consumer survey, 53% of consumers in lockdown in June globally said that they try to buy products only from their favourite brands. This has remained relatively stable across the lockdown period with results from the same survey conducted on 1 April standing at 51%. This highlights the brand loyalty of consumers worldwide, half of whom are willing to pay more for a particular brand over a cheaper alternative. There is an opportunity here for well-established brands to compete well with private label offerings during the pandemic using direct-to-consumer selling strategies.
Elisabet Gonzalez, innovation team leader at GlobalData, comments: “In uncertain times, consumers tend to seek comfort from familiar brands they perceive as more trustworthy. With the risk of a second wave of infections and more lockdowns, moving towards online sales and home delivery is likely to help brands reach a wider consumer group, as well as maintain their most loyal consumer base. Other brands have also adopted this model such as PepsiCo with its new direct-to-consumer websites in the US.
“With supermarkets gradually selling more private label products, competition on supermarket shelves is increasing. Selling products online and providing fast home delivery will be an added benefit and differentiator for brands, setting them apart from competitors.”
However, while online platforms allow manufacturers to reach a large number of customers, competition with other products selling on the same app is huge.
Gonzalez adds: “Modern channels of marketing, such as social media, and more traditional channels remain crucial for building and cultivating relationships with consumers, especially within crowded digital marketplaces.”