Consumers may no longer be ‘trying out new brands’ in the market: Analyst

Morning Consult Head of Industry Intelligence Joanna Piacenza joins Yahoo Finance Live to discuss a new report highlighting the fastest-growing brands of 2022 and what it says about the state of the U.S. consumer.

影片文字轉錄稿

SEANA SMITH: Inflation is a huge issue that's not only facing consumers, but also brands. There was a new report out from Morning Consult finding that consumers were buying fewer of their favorite items. They were also passing on trying out new brands, clearly having an effect on businesses this year.

Here to discuss more about that is one of the authors of this report. We want to bring in Joanna Piacenza, head of industry intelligence at Morning Consult. Joanna, it's great to have you. So your big takeaway from the report, or I should say, my big takeaway, at least, was the fact that brands had a very, very tough year. It was tough for them to attract new consumers. What was the ripple effect? I guess, how big of a headwind was this for many companies last year?

JOANNA PIACENZA: Yeah, you really nailed it. The big takeaway from this report is just how much consumers cut costs this year. This is an annual report. We do it every year. We measure purchasing consideration throughout the year. Average purchasing consideration for 2022 declined this year. That's different from the past three years.

That includes the really traumatic kind of COVID years that had better purchasing consideration among brands. What that means for consumers is they're not buying more of their favorite brands, and I think really importantly for new and emerging brands, they're not necessarily trying out kind of new brands on the market.

DAVE BRIGGS: Interesting. So no brand reached every generation. Joanna, what was the common thread, though, among those brands that did do consistently well this past year?

JOANNA PIACENZA: Yep. So one of the big brands that really decorated a lot of our lists was cost saving alternatives. You have Breeze Airways. That's a new emerging brand that is really an alternative to JetBlue, Spirit, kind of looking to compete against consumers who are looking to save a little bit money. You also have DiGiorno, a frozen product that's really replaceable for pizza delivery and takeout.

You've Roku. They really have a low cost product. They also have an ad-supported system. Again, a really good selling point for consumers looking to be a little bit more cost conscious.

SEANA SMITH: Joanna, two other brands, though, jumped out to me. Crocs was on a lot of those lists.

DAVE BRIGGS: Yes.

SEANA SMITH: And Meta, Meta in a year where their stock is off over 60%. What was your takeaway from those two appearing on lists throughout the generations?

JOANNA PIACENZA: Yeah, well, we'll start with Meta. And I should flag that this data was pulled before a lot of the negative news around a lot of the tech layoffs that were happening, including Meta. So Meta actually follows what we traditionally see in our fastest growing brands report as a successful brand. Its awareness is ascending as its purchase consideration is ascending as well. As people are becoming more aware of it, they're considering purchasing from it.

Now, what's interesting about Meta is it's really fighting against two really strong elements-- an association with Facebook, which does not have a very warm public opinion, and a CEO that's very public, which, according to our research, doesn't do well for a brand.

So the fact that it's still rising, even despite these elements, speaks very well for the rebrand into Meta, which we haven't really talked all that much about. Another element that I think is helping Meta is an increased awareness and interest in the Metaverse, right? You can't think of the Metaverse without speaking about Meta.

Crocs, on the other hand, is a really interesting brand to have on our list. They've had a really successful year of pairing-- not alienating their core audience, who are just concerned with comfort and affordability, and also kind of chasing after trends. So staying trendy with their different accessories, that balance is really benefiting Crocs.

DAVE BRIGGS: Jibbitz are exploding, man. I've never had Crocs on my feet ever, but I see them everywhere. All right, Joanna, I want to ask you about millennials, who showed the most lackluster growth. What do you make of that?

JOANNA PIACENZA: We tracked financial well-being here at Morning Consult, and millennials, sadly-- I hate it to break it to that generation, although this might not be news for them. They have some of our lowest financial well-being of all the generations that we track. If you look at their average purchasing consideration for the brands that make it on their list, it's quite low compared to those of other generations.

This is a generation that is struggling to purchase a home, to speak to your previous segment. This is a generation that has young kids. Childcare costs-- that adds up. They're not a generation that's going to be going after new brands, spending a lot of money, something for these consumer facing brands to keep in mind.

SEANA SMITH: And Joanna, taking a look at Gen Z, some of their top brands, they stuck out to me. Roku, number one, makes a lot of sense. Grand Theft Auto, I can see that. Beats was a surprise at number three. But if you go even further down that list, Heinz was on there. Marathon Oil was on there. Homes and Villas was on there, names that I wouldn't necessarily associate with Gen Z off the bat.

JOANNA PIACENZA: Yeah, we see Beats on a couple of different rankings. I think they had some good partnerships this year, that it's really benefiting the brand. We also saw a lot of hotel brands on Gen Z. One thing to keep in mind is that Gen Z really missed out on a lot of the travel excursions that a lot of us experience as we enter adulthood.

That's because a lot of them were entering adulthood and coming into more discretionary funds as COVID was hitting. So they're experiencing a lot of these hotel brands, travel brands, airline brands, really, for the first time this year. And that's why we're seeing those kind of small bumps, especially among travel brands.

DAVE BRIGGS: Joanna, do you have Crocs?

JOANNA PIACENZA: I do not. Do you?

DAVE BRIGGS: No, I don't. I-- never, never. But this report makes me curious. Joanna, we appreciate. This was a fantastic conversation. Please come back.

JOANNA PIACENZA: Absolutely. Good to talk to you.