On a sticky London night a little while back, after walking past the queue outside McDonald’s, then joining one to get some much-needed Evian, I found myself contemplating one of the big consumer behaviour changes being touted as a new post-crisis norm: localism.
According to a study from research company Kantar, the Covid experience has driven a surge of support for local produce in all parts of the world. Chinese consumers felt most strongly about sticking to the buy-local mantra, with 87% agreement, followed by consumers in Italy (81%), South Korea (76%) and Spain (73%). Overall, 42% say they now pay more attention to the origin of products. Localism has gone global.
The ideology of localism predates the crisis, of course, and – to do justice to its proponents – embraces more than just whether you happen to choose a domestic cola over a Coke. Much of what it espouses concerns the natural levels of governance appropriate for societies – with argument for decision-making layers somewhere between the ‘Dunbar number’ of around 150 people that any individual will personally know and the 3,000 to 5,000 people that make up a small community. Hyperlocal sourcing and even homesteading are the main consumption themes.
For marketers, though, and especially those with ‘global’ in their title, it is the unknowns of the consumer behavioural trend that send shivers down the spine. Will mighty brands that have been nurtured and nuanced over decades be felled by artisan offerings in a million farmers’ markets? What scale of seismic shift are we talking about here? And what can be done to confront it?
Knowing what you’re up against
Like so many concepts in marketing, ‘local’ has about it a fractal dimension that makes it hard to neatly define. Multinational brand owners like Unilever, with a focus on building powerful, cross-border equities, use the term ‘local jewels’ to delineate those brands that are wildly popular in one country but stubbornly refuse to be exported to another. Marmite in the UK is an example.
If your default frame of reference is the world, then a UK-only brand will seem local. But even in a mid-size country like ours, that represents a market of 67 million people; if the local-jewel brand were confined to, say, Brazil or India, that would be 209 million and 1.3 billion people respectively.
Brands obviously can and do get far more local than that. Within any given country there will be brands of bread, beer, sausages – even financial services – with a regional or microlocal footprint. Is this where the threat to the global players will increasingly spring from?
It’s a plausible theory. While the Kantar study focused mainly on the boundary between international and national brands, you could reasonably infer the direction of travel to be all the way down the fractal cascade. As brands get closer to home, the cargo of meaning they carry will contain less of the perceived danger of distance. And, at a purely practical level, the enforced confinement to the neighbourhood over recent months will have helped people discover microlocal resources that could now become established in their consumption repertoire.
If the trend gathers pace as many predict, what can big-brand marketers do about it? The temptation to dress your, obviously global, brand in local streetwear is to be resisted. It never ends well. A clue to a saner strategy comes from another study from another part of the Kantar stable – this time, one that predated the crisis, and thereby offers the multinational marketer a chance to step back before they panic.
Innovation is key
In 2012, Millward Brown showed that innate consumer preference for local brands was already well established. It is nothing new. Across multiple markets, the average scores for its pinnacle ‘bonding’ metric – a measure of consumer affinity – were significantly higher for single-country brands than for international brands.
Bonding is one of those marvels of mathematical extrapolation in which big research companies specialise (and to add to the complexity, Millward Brown has since renamed it ‘brand power’). Either way, though, the metric is a proven predictor of brand growth, so it is worth looking under the bonnet to see what its individual constituents might be. There are three – and on two of them, local brands will tend to have a natural advantage: ‘salience’ and ‘meaning’.
The third constituent is ‘difference’, driven by consumer innovation. And it is here that multinational brands, with their vaster resources, tend to fight back. In China, for example, this ‘innovative difference’ component was the only reason global brands were gaining any foothold at all.
Resources for innovation are an advantage that bigger brands enjoy over smaller ones all the way down the rungs of market reach. Those breakthroughs need not always be at the level of the product itself – it could be about packaging, delivery mechanisms, pricing structures, service initiatives – but it is innovation that should be the priority now for any big-brand marketer that seeks to play from strength.
This is not to imply that brilliant new ideas cannot come from regional or even microlocal brands. Of course they can. But something interesting happens when they do. The success derived from consumer enthusiasm for the innovative offering persuades the brand owners to expand to the next level up: from microlocal to regional, to national, to global. Brands trade off some of their ‘local’ credibility for the right to play in a bigger arena.
It is a reminder of the dynamic nature of markets – one of the most confusing but also most uplifting features of our discipline. If brands don’t remain at the geographical level consumers have mentally assigned to them, that is because those who have invested in them have a say, too. Inside the DNA of every brand worth its salt is the lust to expand. Nobody ever got rich confining themselves to the Dunbar number.
Consumers may regret that, of course, and may wish that their wonderfully clever local gem of a brand would stay local just for them. But why should the brand owners risk so much for so little? In that paradigm, Anita Roddick’s Body Shop would still be a small single outlet in Brighton.
In any case, I am not sure that localism was topmost in the minds of the customers forming that long queue outside McDonald’s. Nor in mine, come to that, with my very specific requirement for the Franco-global construct that is Evian. If I’d wanted local water, I could have turned on the tap.
It might well be that these crazy Covid days have prompted significant consumer behavioural changes that will redefine markets forever. I am just not sure, on reflection, that localism will be one of them.