Value Leads Store Brand Growth; Promotion Aids Brand Products

According to a Nielsen study among 21 European and North American countries, reported by Todd Hale, Senior Vice President, Consumer & Shopper Insights, heavy store brand buyers are good for sales overall, leading the charge on unit growth, unit spending and trip frequency criteria. Store brands have won favor among younger households, boding well for long-term store brand prospects.

Prompted by belt-tightening as consumers respond to the long-tailed economic downturn, store brand offerings posted value or currency share gains in two-thirds of the 21 countries Nielsen studied, picking up an average of 1.3 share points during 2009.

The U.S. trajectory was more pronounced, with store brands advancing to a 17.3% share of dollars and a 21.9% share of units by March 2010, up 2.1 and1.9 points respectively from 2007. Branded products, however, still drive the vast majority of dollar (82.7%) and of unit (78.1%) sales.

Store branded offerings demonstrated consistent, gradual improvement over the last half of the year. During this time, store brand average period unit sales grew by 2.5% while brands realized incremental growth of 0.4%. Increases in promotional support behind branded products helped stabilize a declining trend.

Store brands captured a 20 unit share or higher in 48 of the 117 categories analyzed by Nielsen. Store brand share fluctuated widely by department from a high of 40% for the dairy department, to a low of less than 1% for alcoholic beverages. This mirrors the typical pattern of store brand strength in commodity categories like milk, eggs and sugar, as well as those with little "consumer-perceived" differentiation such as first aid or wrapping materials.

U.S. Retailer Brand Unit Share by Department (% of Unit Sales 52 wks. Ending 3/20/2010)


Store Brand Unit Share

Average all departments




Non-food grocery


Frozen foods


Dry grocery






Fresh meat


Fresh produce


General merchandise


Packaged meat


Source: the Nielsen Company, May 2009

In categories with a history of strong brand marketing support like beer and candy, or those with a high demonstrated level of innovation such as deodorants and detergents, store brand share remains relatively weak and undeveloped.

Significant real price gaps between store brand and national brands present an opportunity to drive category sales by narrowing the gap in select categories such as those with a high consumer value perception, says the report. To demonstrate the impact of a unilateral, almost imperceptible one cent price gap decrease across categories, Nielsen calculated the yield at up to $400 million in incremental annual unit sales due to increased volume.

Percent Price Gap Store Brand vs. Branded (4 Weeks ending 1/21/2010)


Store vs. Branded Price Gap

Health & Beauty




General merchandise




Dry grocery


Frozen food


Source: Nielsen Scantrak, (FDM w/Walmart), May 2010

Heavy buyers made a bigger impression on store brand sales in 2009 versus 2008. Comprising just 20% of households and 46% of store brand unit sales in 2008, super heavy buyers expanded to 22% of households in 2009 and chalked up 48% of store brand unit sales. Not only did super heavy store brand buyers ring up big store brand sales, they also accounted for 34% of total purchases across the store in 2009.

To put super heavy buyer clout into perspective, according to the study, their all category buying rate is three times that of the super low store brand buying segment, and they deliver twice as many buying occasions as super low store brand buyers.

In contrast to the manufacturer coupon model, where the heaviest users are the most affluent consumers, store brand heavy users cluster in the middle income range with annual household earnings of $30,000 to $69,999. While it's logically consistent that bigger households, store brands also have a loyal following among two-person households looking for value.

Younger female heads of household have a propensity to shop store brands, which is contrary to the conventional brand management wisdom of targeting young buyers to secure their loyalty early on. At the opposite end of the spectrum, the lightest store brand shoppers are men over the age of 65.

Heavy store brand buyers tend to be white vs. ethnic households, that live in comfortable country or plain rural living areas, with 3+ person families. The demographic segment that experienced the fastest growth in store brand unit sales among the heaviest store brand buyers came from households with incomes of $100,000 or more.

Store Brand Buyer Profile

·      Middle income families (between $30-$70K annual incomes)

·      Reside in "plain rural living" and "comfortable country" areas

·      Larger households with 3+ members

·      Younger female head of household

·      Fastest-growing segment is families making $100K+

Today's store brand portfolio is multi-tiered and can include a value tier with low opening price point, national brand equivalents with comparable quality at a savings, and a premium or specialty strata such as a natural/organic label, one-of-a-kind innovative items or a line that does not include the store name at all.

For additional information, please visit Nielsen here.


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