Store Brands Growing Across All Channels
Store brands enjoyed another record year of sales last year. Among all major U.S. retail channels, sales increased by +2.9% pushing annual revenue up more than $3 billion to over $108 billion, an all-time record.
Studies underscore the popularity of store brands
New industry studies reinforce the 2012 sales data by documenting the growing popularity of store brands among the country's consumers.
• Growth is the result of rising product quality according to a Consumer Edge survey of 5,000 shoppers: "While US consumers were slightly less likely to economize in 2012 when buying packaged goods than they were in 2011, use of store brands continues to rise in many categories. This is driven by store brand quality continuing to improve across most of the categories covered in our research and store brands are likely to continue to gain share in many product categories." One key conclusion was that nearly everyone buys store brands at least some of the time across the fifty-seven product categories in the study.
• At the same time, brand loyalty continues to erode. Market researchers have found most consumers are "brand agnostic." They are open-minded when it comes to brands, as desires for new experiences often replace brand loyalty. More than half have become "brand agnostic," saying they don't care if a product is offered under a national brand, store brand or specialty brand. Two thirds said they choose products according to a whim or desire for variety rather than brand affinity. Consumers neither avoid nor seek out particular brands, as long as the product fulfills their desire for something other than the usual fare.
• In such a brand-neutral environment, shoppers are increasingly reaching for private label. In a GfK study of 1,000 men and 1,000 women who identified themselves as the primary grocery shoppers for their household, more than 40% of both men and women declared they were "frequent" purchasers of store brands. The patronage figure rose sharply to over 80% among both men and women when those who are "frequent" and "occasional" purchasers of store brands were aggregated, according to the nationwide study that was conducted by GfK for PLMA.
When consumers try store brands they like them
The recent economy no doubt forced consumers to test new purchasing habits. Good results with store brands during such difficult periods invariably breed familiarity and then loyalty to the products and the stores that sell them. While some consumers do return to brands they had been buying, a large percentage stays with their new private label choices. Sales data and consumer behavior from previous U.S. recessions bear this out.
Store brands are 'mainstream'
Nielsen says, "Once the exclusive purview of value-conscious shoppers, store brands have achieved mainstream status among most consumers by narrowing the price and quality gaps that once demarcated national brands and private label. Retailers are responding by venturing into new territory such as health and beauty and even alcoholic beverages. By applying a new rigor to store brand management, retailers will borrow a page from the national brand playbook and grow their offerings guided by consumer research, innovation, tiered pricing and proactive brand teams. That will help store brands achieve staying power and build loyalty."
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