There is no doubt that U.S. store brands benefited greatly from the Great Recession of 2008-2009. The quality of today’s store brand offerings coupled with more value-conscious consumers looking to stretch their dollars ignited a sales boom. In the U.S., private label sales increased 1.8 share points from the end of 2007 to the end of 2008 to reach a 22.3 percent market share.

The reputation of store brands today continues to improve. Nielsen research shows that three-quarters of consumers believe store brands are a good alternative to name brands and two out of three agree that quality is also on par. And fewer consumers view store brands as those geared towards people on tight budgets who are unable to afford “the best”.


But since the end of 2008, store brand share growth across food, drug and mass has been fairly flat as brands stepped-up their promotion support and innovation efforts and some retailers took on a “build it and they would come” strategy. Today, national brands still command 78 percent of CPG unit sales.

Store brands may have reached a new share plateau, but long-term growth will be fueled by both consumers’ interest in value and retailers’ focus to drive margin and build banner equity. Retailers need to manage their store brands like manufacturers do – by investing in research to identify the best new products for roll-out combined with the most effective marketing/merchandising support to build awareness, generate trial and repeat purchasing to yield sustainable and profitable volume levels.

Strategies to Grow Store Brands:

  • Expand the variety. Half of consumers said they are willing to buy more store brands if there is greater variety. Do your homework to assess opportunities among your core shoppers. Don’t introduce new lines or items at the expense of high penetration and/or high frequency brands, which can drive your shoppers to competitive retailers.
  • Keep prices affordable. The majority of consumers are not willing to pay more for store brands. The same is true for brands, but an assessment of price level and price gaps between your store brands and brands can yield stronger sales and profits.
  • Invest in quality. Value is important, but quality goes hand-in-hand. Consumers dissatisfied with quality will buy less. Store brands don’t need to be just about low prices; a tiered store brand approach can allow you to build sales among diverse shoppers.
  • Build strong brand equity. About 40 percent of consumers claim to only trust store brands from retailers they have confidence in. Enhance your shopper connection with a strong store brand program.
  • Connect with younger consumers. Younger generations are strongly committed to store brands and low prices. Not only do they view them as good alternatives to name brands, but almost half (42%) said that some store brands are higher quality. These shoppers are also more engaged in online information seeking, so look for opportunities to connect with them via digital communication vehicles.
  • Reach older consumers. The “Greatest Generation” leads the way in believing store brands are “extremely good value for money”. This group is a prime segment for trial programs. Leverage in-store sampling programs, money-back guarantees, and communications through your paper circulars.
  • Appeal to lower-income consumers. Necessitated by a need to stretch dollars further, lower-income consumers have a stronger commitment to store brands. These shoppers are also less inclined to believe that store brands should always include a retailer’s name on store brand products. Have some fun naming your store brand items.
  • Understand Hispanic consumers. Hispanics place great importance on getting the best price and say they will buy more store brands provided there is more variety available. Based on population projections, Hispanic households will represent the single biggest growth opportunity for years to come; now is the time to make an investment to understand how your store brands connect with Hispanics.
  • Broaden appeal for African American and Asian consumers. African American and Asian consumers are very committed to brands, so look for opportunities to co-promote the right combination of branded and store brand items and be careful not to invade a branded space with a store brand offering and turn away shoppers.

SOURCE NielsenWire

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