June 3 - 6, 2024
retail
Study: Store Brands Still On Fire
- by Sarah Mahoney @mahoney_sarah, July 13, 2012
While the recession-era dread may be long gone, a
new study from Accenture finds that Americans are still in love with private-label grocery products. The research, based on 500 U.S. shoppers, finds that 64% of the shoppers surveyed buy store brands
at least half the time. And 39% have been buying more private-label goods in the past few years, and have no plans to return to brand names.
Nor is there any love lost between shoppers and the brands they ditched along the way. Although 87% would buy more brand-name products if they were offered at the same price as the comparable private-label product, 51% said it would have to be a permanent reduction in order to persuade them to switch back. And 77% say they would keep buying the same amount of these products, “even if their disposable income were to return to the same level as it was before the economic downturn,” the consulting company reports.
advertisement
advertisement
Most striking is the consumer perception that these store brands are just as good as branded products, with 50% of the respondents believing they are comparable. Some 42% say they trust the store brands they buy, and 28% say they prefer them. Just 9% do not buy store brands, because they think they aren’t as good.
And consumers are responding favorably to stores’ efforts to improve and expand product lines, with 48% agreeing that stores are offering more variety in private-label products, and 36% say they now view those products as “just another brand on the shelf.”
Of course, not everyone agrees. In a study done late last year, for example, Deloitte LLP found that 49% of its respondents are losing interest in store brands. And of those who do buy them, 90% have already stabilized their choices, and know which store products appeal to them, and which national brands do.
In its most recent calculation, the Private Label Manufacturers Association, working with data from Nielsen, says that annual private-label sales are $88.5 billion, accounting for 19.1% of dollar sales in grocery stores, and 23.5% of all unit shares. In drug stores, they claim 14.7% of dollar sales, and 16.2% of units.
I wonder how much packaging design is contributing to perceptions that the products themselves are just as good? Most mid-level+ store brands today don't have the same generic labels (black and white, devoid of personality) that original store brands had. Target's Market Pantry and up&up brands come to mind immediately but other retailers have obviously put a lot of care into package graphics ex. Walgreens, Publix, Wegman's. I would say of all, Walmart's store brand feels the closest to "generic" - but is still a big step above where store brand packaging used to be.
I always question surveys of these types when they are not tied to specific sales/share figures. My guess is that there is a wide variance by category and in most cases, national brands are still #1 in sales and share.
One of the problems plaguing brand manufacturers is that they've wasted 2 decades of advertising on "brand advertising" where they pitched a life-style and left consumers without significant reasons to buy their products. So, in the survey noted here, my guess is the consumer's real response is: "I'll buy a non-store brand product when there's a good reason to. And at that time, price really isn't a problem as long as its fair. But I generally don't know WHY a brand product has an advantage. So I fall back on price - and that means the store brand wins." Consumers want value -meaningful things that help their lives. But they won't know you offer the value unless you tell them about your products. And far, far, far too little brand advertising does that.
The interesting development in the generic vs. Branded battle for for the consumer is those stealth store brands, referred to as "Fighter Brands", carefully positioned in Price appearance between the two. There is scientific research proving that consumers with, for the most part usually opt for the safe, middle point of value. ( this is how car option and cable packages are carefully structured) So, the consumer thinks " Oh, I deserve better than the ugly old generic product, but I'm going to get a better value than that over-priced big name brand product.