Nearly every household in the United States purchases store brands today, and 80 percent of consumers believe store brand products are equal or superior to national brands in terms of quality, value and packaging, according to new studies bySymphonyIRI Group Inc.
The Chicago firm says these are just two statistics that demonstrate the remarkable strength of store brands. Retailers have introduced sophisticated strategies to build store brand dollar and unit share growth, while national brand manufacturers have responded with aggressive new marketing strategies of their own.
SymphonyIRI said two new reports analyze the dynamics of today’s store brands market. Officials said their latest study, “Understanding and Mitigating the Private Label Threat,” provides a detailed, 146-page perspective on the store brands market and is tailored for national brand manufacturers.
SymphonyIRI also said its monthlyTimes & Trends, “Store Brands: More Than Just a Safe Harbor in Turbulent Times,” provides manufacturers and retailers insight into current and emerging store brand trends as well as influencing factors that are helping to define the CPG industry of tomorrow.
“Store brands growth galloped during the recession as shoppers revised their definition of value to be much more focused on price,” said Sean Seitzinger, senior vice president, Consulting & Innovation, SymphonyIRI. “Today, growth continues at albeit a slower pace as the economy recovers, but store brands are here to stay and are gaining in importance. As retailers accelerate investment in aggressive assortment, product and promotion strategies, we expect store brands to play a critical role in offering value and differentiation.”
Among the principal findings of these new reports:
-- Dollar and unit share each grew 0.2 share points, to 18.3 percent and 23.1 percent, respectively, in 2010 over 2009; contrasting with growth of 1 point and 1.3 points in 2009 over 2008.
-- Dollar and convenience stores enjoyed the most rapid unit share growth of 1.1 points and 0.9 points, respectively.
-- The healthcare department witnessed the most significant store brand growth in both dollar and unit share of 2.6 points and 1.7 points, respectively.
-- On average, store brands offer a savings of 30.5 percent as compared to national brands, but average price gap varies widely across departments. These savings range from as low as 7 percent in fresh/perishable products to nearly 61 percent in beauty and personal care products.
SymphonyIRI said store brand sales tend to be more concentrated versus the CPG industry as a whole. One-third of shoppers account for 62 percent of store brand sales, and the top 50 categories of store brand products account for more than two-thirds of store brand sales, versus 59 percent for the CPG industry as a whole.
Officials recommended that CPG companies ...
... continually identify and assess brand-specific opportunities, such as optimal price gaps versus store brands and means to protect and grow share in categories where there is a strong store brand presence through value-oriented promotions;
... continually redefine pricing strategies to ensure alignment against the needs of key consumer segments, invest in product, packaging and promotion innovation across key categories, and implement highly-targeted and affordability-oriented marketing campaigns where store brands exhibit the greatest threat;
... implement metrics to monitor actual versus planned impact of store-brand related initiatives.
Studies showcase private label growth, CPG response
Looking for a reprint of this article?
From high-res PDFs to custom plaques, order your copy today!