For Retail Brands, Loyalty is Stronger Than the Pandemic

A lot has changed since the marketplace was visited by the coronavirus. Businesses closed down. Schools closed down. Restaurants closed down. Retailers were forced to close down, too. At last count, since the COVID-19 pandemic began in March, 22 retailers have filed for Chapter 11. That makes a total of 42 retailers this year, and twice as many as 2019. So not a good sign for the retail category.

However, customer loyalty has protected many brands from the threat of Chapter 11 bankruptcy proceedings. High levels of customer loyalty can help to battle high levels of closures. Why?

Well, it's a proven marketing tenet that brands able to engender customer loyalty are six times more likely to find customer support during difficult times. Or exoneration for an inability to open doors and provide products and services. Like the current pandemics, both medical and economic. It’s reasonable to say that not since 1918 has the retail marketplace had to deal with these kinds of enforcement and market conditions. But here’s where loyalty to a brand comes into play.

It turns out that in the 2020 Brand Keys Loyalty Leaders survey, 19 percent of the Top 100 brands customers evaluated were represented by retailers, which clearly understand the value of customer loyalty. The Retail category had the most brands appearing on the list of any industry sector. That was rivaled only by the Tech and Social Networking sectors at 17 percent. Therefore, given the pandemic, a really big deal!

Consumers designated 10 retail categories to which loyalty was unquestioned, and where brands were supported. You might have thought online retailers would have been the categories to survive, but there’s a real mix of online and brick-and-mortar retailers on the list. These included:

• Cosmetics
• Department Stores
• Dollar Stores
• Footwear
• Home Repair
• Natural Foods
• Online Retail
• Pharmacies
• Price Clubs
• Sporting Goods

It’s true, one can’t, one shouldn’t, ignore the effects of the COVID-19 crisis. The combination of enforced store closures, sheltering-in-place and working from home, and trends towards more casual conference call, casual dress, the need for less or no makeup, and more informal home environments were a condition only brands with high levels of loyalty could survive.

There's a definite correlation between customer loyalty and brand success, or in the current circumstances, survival. In fact, six times more according to every Loyalty Leaders List study Brand Keys has conducted over the past 24 years. Loyalty has always been a leading indicator of positive customer behavior toward brands and, axiomatically, sales and profits.

Retail brands customers placed onto this year’s list included the following (numbers in parentheses represent their ranking in the top 100):

• Amazon.com (1)
• The Home Depot (8)
• Nike (12)
• Trader Joe’s (19)
• eBay (22)
• Whole Foods (23)
• Zappos (25)
• Sephora (33)
• CVS (41)
• Zara (43)
• Costco (45)
• New Balance (46)
• Ralph Lauren (52)
• Sam’s Club (55)
• Lowe’s (58)
• Old Navy (68)
• T.J. Maxx (79)
• Dollar Tree (80)
• Dick’s Sporting Goods (90)

You can blame the pandemic, sheltering-in, online meetings, and sweatpants all you want for the list of retailers seeking Chapter 11 protections, but ultimately, whether consumers support a brand and whether the brand survives uncertain circumstances like the pandemic comes down to how much loyalty the brand engenders.

To determine the current expectations levels for each of the retail categories included this year, Brand Keys surveyed, 3,265 men and women, 16 to 65 years of age from the nine U.S. Census regions using an independently validated research methodology that fuses emotional and rational aspects for the category-specific ideal, and identifies expectations consumers hold for each.

Brands that want protection from sicknesses of all kinds need to know what expectations consumers hold for their category, and then meet them as best they can. That’s what “loyalty” looks like in the 21st century marketplace. In that marketplace, pandemics are no match for a loyal customer. Clothing may make the man (or woman), but loyalty always makes the brand!

Robert Passikoff, Ph.D., is the founder and president of Brand Keys, Inc., a brand research consultancy.