The shrinking leap from challenger brand to champion
It has been accepted practice that the brands we know and (sometimes) love take decades, if not centuries, to make it to their position of dominance. Many of our current high street brands were born in the 19th Century, from banking, HSBC (established 1865) and Barclays (1896); to retail, John Lewis (1864), Boots (1849) and M&S (1884). All have built up their status gradually over time. However, all this is changing, with many of the brands we now use and interact with reaching positions of prominence in record time. Often in a matter of years, let alone decades!
This makes total sense in the technology sector, which has been experiencing colossal change over the past 20 years. The emergence of social media and the establishment of brands including Facebook (2004), YouTube (2006) and Instagram (2010) has been, in comparison to my previous examples, swift. Technological changes have even seen the emergence of the new ‘sharing economy’ and its most well-known example; Airbnb, started in August 2008 and currently valued at £30 billion. New business models that do not rely on ‘ownership’ or a physical product in the old-fashioned sense have allowed these businesses to flourish at a breakneck speed.
What is possibly more unexpected, and definitely more worrying for established brands, is the speed at which challenger brands are gaining significant market share within more traditional sectors. Across retail, FMCG and banking, young brands are dominating and even overtaking the establishment.
Let’s take retail as an example, the brand landscape today includes names like ASOS, Missguided and Boohoo.com. All less than 20 years old, but with a strong (and sometimes exclusively) online presence and social media following that have led to impressive sales figures. For ASOS, this has placed them in the top 10 of the largest fashion companies in the UK, valued at £2.9 billion and with annual sales of £1.15 billion. This sector shows how quickly new names can become key destinations for the savvy consumer. One of the (relatively) old-guard remains in the mix, with Topshop creating a strong online presence. They are one of the few high street fashion retailers to have over 1 million followers on Twitter and also lead the pack on Instagram with nearly 7 million followers.
The same thing is happening in sportswear. You’ve probably heard of Under Armour, in the UK they sponsor Andy Murray and Tottenham Hotspur FC. However, their rapid growth means that in 20 years, they have surpassed Adidas in terms of sales.
Even the financial sector has a new kid on the block in the shape of MetroBank, which, in the space of 6 years, has opened 42 stores (not branches, you’ll notice) which are open 7 days a week. By challenging what a bank offers and by giving consumers what they want and expect, Metrobank is the first retail bank to launch in the UK for over 150 years and tempt customers away from the big four. OVO Energy is doing something similar in the utility market.
Deal seeking has become the new norm for consumers and our recent self-funded survey, exploring the views of Gen Z, has highlighted that this generation is not afraid to shop around to get them. We found that this group are less brand loyal than previous generations. Crucially they are a lot more nimble and are far more open to regularly changing suppliers for products such banking current accounts and insurances.
A generation of nomadic shoppers creates new issues for brands. Our findings highlight how trust (traditionally considered a key attribute linked to purchasing) is becoming a hygiene factor. Now, inspiration is becoming more important in the purchase process. Gen Z consumers are not looking for trusted brand names, but inspirational brands and stories.
Brands need to remain ever more agile. It is not just offering what customers are looking for but communicating with them at the right time and in the right way. So,
- Marketing has to be inspirational and authentic.
- The right content and tone for the right channel is key.
- Ensuring the current channels of delivery work for younger customers is paramount.
- And of course, knowing that your product is actually what they want remains crucial.
For challenger brands, there has never been a better time to have a go, but for established names, the old adage has never been so true; there is only one thing harder than getting to the top and that is staying there!
So, if you want to know more about how you can get ready for Gen Z consumers, get in touch. Our research will help you navigate the channels, the needstates and the consumer expectations to ensure that you are ready to cope with the accelerating rate of change.