The years of the great and sustained Chilean economic growth are over.
Much has been said about its causes: the fall in the price of copper, the lack of certainty generated by large reforms in the business environment, the reduced trust among Chileans, and a change in attitudes towards institutions.
As expected, all these elements have already permeated the Chilean atmosphere, impacting its corporations and brands.
In the last couple of years, we have seen the Chilean economy grow only slowly. The causes of the slowdown have impacted employment, and this, in turn, has affected retail and financial services, which according to BrandZ™ analysis have decreased by 15% and 23% respectively, in brand value from 2015. In fact, contraction in the value of brands in these industries explain to a great extent the 12% loss in value of Chilean brands.
Different perspectives have all shown how Chilean consumers have become especially sensitive to prices. Kantar Worldpanel data confirms that two thirds of consumers perceive that prices have risen in the past three months, and four out of every ten Chileans state that their household income has decreased.
MORE SHOPPING, LESS SPENDING
This has resulted in increased visits to points of sale but with a lower purchase amount per visit. The number of places of purchase has also increased. It is interesting to see that this increase in places to purchase has driven growth in shopping at fairs and through promotions. This has not meant that loyal consumers have decreased. In fact, consumers still feel fond of their preferred brands and are willing to buy them, but they do so less frequently while waiting for the turmoil to pass so they can go back to their regular buying rhythm.
Another prevailing factor for Chilean consumers is that their trust level has been undermined. Today they do not blindly trust either organizations or institutions, based on the events of the past few years.
Kantar Millward Brown have learned, from their qualitative and quantitative practices, that trust is one of the main commercial and relational assets between a brand and its consumers. A brand clashing with this dimension is a weakening brand and, in adverse economic conditions, it won’t be able to justify its value, or it will trigger a diminished willingness to purchase. Today consumers are citizens. Although they show a “learned hopelessness” because of past events, today they are empowered, and they demand that the promise of a product or service is fully met.
In this environment, brands must aim at true bonding programs that manage to establish a closer relationship with consumers. They must shift from a business purpose to a brand social purpose and a more symmetrical relationship with consumers that leads to a perception of win-win deals.