Brand loyalty on decline amid big shift in shopper behavior
As consumers grapple with inflation, tariff uncertainty and a difficult macro-economic environment, they are prioritizing cost over brand loyalty.
The overwhelming majority (77%) of consumers are actively changing their purchase behavior in response to price increases, according to EY’s “Future Consumer Index,” which surveyed more than 20,000 consumers across 26 countries. Slightly more than a third (34%) no longer consider brands when making purchasing decisions, with 54% of respondents only buying branded products when they are on sale.
The increasing adoption of private label products is reshaping consumer perception, making store brands the preferred alternative to traditional branded options — 67% say private label satisfies their needs just as well as branded products. Thirty percent of respondents say they no longer consider brands at all when making purchasing decisions.
“Consumer behavior has historically shifted during economic downturns, but today’s changes appear to be more fundamental,” said Rob Holston, EY global and Americas consumer products sector leader. “Unlike past cycles — where consumers returned to familiar brands post-crisis — prolonged inflation, supply chain disruptions and geopolitical instability have reshaped habits permanently.”
Retailers appear to be tapping into this shift to private label, with 64% of respondents reporting seeing more private labels on shelves and 59% stating they see more private label items positioned at eye level. More than a third (36%) of respondents state they will continue purchasing store brands and do not intend to return to traditional branded products.
However, there are reasons for brands to be optimistic, as 65% of respondents globally state they still value them. Notably, 48% of respondents are willing to return to a premium branded product if it offers superior taste, quality or performance, and 36% would switch back to a brand for better value.
Also, 33% are also willing to pay a premium for enhancements that improve product performance. Product categories perceived as the most innovative — beauty (43%), personal care (39%) and household care (39%) — are reaping the rewards of their research and development (R&D) investment.
Other findings from the EY report are below.
- Economic pressures are forcing consumers to trade down as more than half (55%) of global consumer respondents report “rising living costs” as a top concern. This is felt most acutely in the U.S. (61%) France (60%) and the U.K. (58%).
- In the U.S, private label adoption is highest among older consumer respondents, particularly in food and cleaning and household products. In Europe, specifically Germany, private label adoption is being driven by older generations across all product categories when compared with China and the U.S.
- Even when brands turn to innovation and “brand improvements” such as changing ingredients or formulas to create more value, 42% of respondents believe these are simply cost-cutting exercises and not genuine innovation.
- Nearly nine-in-10 (88%) of respondents do not think that brand messaging matches their needs and values, and with 54% of respondents only buying branded products when they are on sale, consumers are prioritizing discounts over brand loyalty.
- Brand loyalty differs by age and country Gen Z consumers are most likely to switch brands (64%), while millennials are the most loyal (25%).
“Brand loyalty is in the balance and consumers aren’t just buying names anymore — they’re buying value, quality, purpose and performance,” Holsten said. ”Brands that don’t adapt will struggle, while those that evolve can capture new loyalty in an ever-shifting market. This is a perfect time for brands that can sharpen their messages and target their audiences, to break out and gain market share.”
