A thorough analysis of the need for retail to invest in Brand Communities
Brand communities are a path that retail can no longer opt out of, as they respond directly to the three major industry trends impacting brand perception today. In this article, we will zoom in on these trends, including a generational perspective. We will also look at the history of community building and why it is resurfacing now. Lastly, we will discuss three key indicators of a strong brand community.
Table of Contents
3 Major Industry Trends
Decrease in Brand Loyalty
Most people are quick to assign disruptive movements to Gen Z, and while that might be true for some of the trends discussed in this article, it isn’t necessarily the case for the noticeable decrease in (intrinsically motivated) brand loyalty. This decline has been visible across multiple generations for years already.
Whereas the Boomer generation bought their products from the brands or stores their parents shopped at, or simply ‘where they’ve always bought it’, Gen X already showed a shift in behaviour by including price motivation in the equation. For Gen X, loyalty is closely tied to being authentic, transparent, and honest. Pricing a product higher than a competitor would often fall into the ‘dishonest’ category for them.
The decline in brand loyalty continues with Millennials, who, while juggling everyday responsibilities, tend to value experiences most. If a brand fails to continue delivering that experience, Millennials will lose interest. Gen Z, a generation with more choice than any before them, will not tie themselves to a brand unless their expectations are continuously met. With the entire world at their constant disposal, they research, compare, and ‘try’ new brands more easily than previous generations.
Purpose over Products
When choosing one brand over another, we see an increasing consumer demand that places purpose over product. The mere purchase of a product is no longer sufficient. Products are expected to offer an experience, contribute to a lifestyle, or represent something to stand for. In short, there needs to be a reason, beyond cost versus value, to choose a particular brand.
This trend first became visible among Millennials, but Gen Z has applied this motivation across many aspects of life. It influences how they think about work (what is the deeper meaning of my job?), the choices they make (what does this relationship say about me?), and therefore also the products and brands they choose. This generation places strong value on the recognition of individuality, combined with a continuous search to belong. Purpose, in this context, does not necessarily imply a higher goal; it can also function as a form of self-expression.
Rise of Collective Action
We all remember those young teenagers a few years ago calling upon the ‘adults’ to change their ways so that future generations would still have a world to live in. Gen Z has placed environmental awareness at the core of its values, deeply caring about the impact of their choices on the environment. They are also quick to abandon brands when they suspect ‘greenwashing’. Many brands have successfully embedded environmental considerations into the core of their identity, making it easier to meet the expectations of Gen Z.
Whereas Gen Z has focused primarily on the environment, we see Gen Alpha increasingly directing its attention towards social impact, such as child labour and exploitation. Both generations, albeit different in focus, place collective action, as well as the recognition of their collective worth, for example being able to make a difference, at the core of their decision-making.
However, it has to be said that, although this trend is clearly visible among these generations, there is a difference between being perceived as environmentally conscious and acting upon it. This is commonly referred to as the attitude–behaviour gap. This differentiation is, among other factors, influenced by social media. Gen Z attitudes are strongly shaped by peers through social platforms, which still leaves room for individual deviation, unless collective action, for example following an online exposé, translates these attitudes into behavioural change as well.
These three trends are well captured in a quote by Doug Stephens from The Retail Prophet:
Contextual awareness allows EVA to make informed, dynamic promises, not generic ones.
The future of retail isn’t just in transactions; it’s in creating experiences that resonate emotionally and socially with customers. Communities provide that resonance.
Experiences presented within the context of a brand community offer:
• purpose that extends beyond the purchase
• a social framework that influences behaviour
• a collective for self-expression while still belonging to something greater
Communities counteract these disruptive industry trends by offering a framework for commitment, from brand to consumer and from consumer to brand. Besides, the numbers don’t lie:
According to a report by HubSpot, 90% of consumers say they are more likely to recommend a brand to others if they feel part of a community around that brand.
According to a report by Accenture, 66% of consumers say they are more loyal to brands that engage them with relevant content and community experiences.
A study by CMX found that businesses with active brand communities can see a 20% increase in sales, as loyal community members are more likely to make repeat purchases.
So Why Now?
Research into, and the perceived value of, brand communities is not new. The earliest references in academic literature date back to the early 1990s, addressing questions around the decline of geographically based communities and their influence on consumer behaviour.
In the early 2000s, a groundbreaking article by Albert M. Muniz further explored the impact of brand communities on brand loyalty. Interest continued to grow, with early brands experimenting with community-driven approaches. However, the financial crisis shifted focus inward, forcing many brands to prioritise survival over what was often seen as a costly investment in new forms of customer relationships.
Following the financial crisis, technological advancements enabled brand communities to emerge even without active brand involvement. However, the most recent global crisis marked a tipping point. Brand communities shifted from being optional to becoming a viable path to survival.
During COVID, the world realised that individualism has its downsides. It lacks much needed human interaction, a sense of belonging, and shared experiences. This crisis reinforced the importance of belonging to something greater, to a community. Combined with the ongoing decline of traditional communities based on geography, trade, or religion, this creates both space and opportunity for brands to step in and meet that need.
The Core Principles of Brand Communities
Now that we have outlined why brand communities are becoming increasingly relevant for retail, we will discuss three core principles of a strong brand community.
First, brand communities need to be hybrid by nature, existing both online and offline. As explained earlier, communities that exist solely online lack real-life human interaction. Online examples include forums, consumer-driven platforms, virtual events, and social media. Offline, this can take the form of events hosted in flagship stores, pop-up locations, or activities connected to the brand’s purpose. A good example is cycling trips organised by an outdoor brand.
Next to that, Brand Communities require a shared conciousness and shared rituals. This shared consciouness is most strongly experienced in an ‘us versus them’ situation. Every good movie needs a protagonist for the hero to have purpose. The presence of an alternative forces the community to consider the collective reason for their choice. Why do we prefer this brand over another? What set’s us apart? As we will see in the next paragraph, this isn’t necessarily equal to the intended brand image.
Shared rituals on the other hand provide a sense of recognition in the crowd; a distinctive action that joins two members together. These rituals can also be recognizable tokens such as merchandise (for a non-apparel focused brand) or collector’s items.
Lastly, strong brand communities are characterised by their own internal communication. Messages circulate within the community, shaped by shared consciousness and rituals, and gain meaning through interaction between members. These messages are not initiated or controlled by the brand, but emerge organically from within the community itself.
In well-established brand communities, these internally shared narratives are often recognised and echoed by the brand. However, this alignment is not a prerequisite for the community to exist. Experience shows that community narratives do not always match the brand’s original positioning. This divergence is not necessarily negative; it can signal what the community values most and why it has chosen the brand in the first place.
Much like target audiences can be researched and understood, the same applies to target communities. Observing how meaning is created and shared within a community provides insight into the strength and relevance of the community itself.
This article showcases clearly the motivation for investing in brand communities, why we can’t wait to do so and what the indicators are for a strong brand community. In further articles we will deep dive into the 5 core principles for growing and fostering your brand community.
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