- More than half of consumers are loyal to a specific store due to its private label brands, according to a report from retail consulting firm Daymon. The report also found that 85% of consumers say they trust a private brand just as much as a national brand, and 81% say they purchase a private brand product during every shopping trip.
- Private brand dollar sales grew 4% in 2018, nearly six times the growth of national brand sales. This growth was present in food, household, pet, beauty and personal care categories.
- The report also noted that 20% of sales growth in private brands comes from products that are branded premium, trendy or organic. About 41% percent of consumers would like to see more better-for-you products and 44% want more unique attributes.
Private label brands were once seen as value products with lower quality, but the tables have turned as private label growth is now outpacing national brands and surging in popularity among shoppers. Now, more retailers are investing in private label products and tailoring their assortments to meet consumer demands.
Consumers continue to reject the notion that National Brand is best — with 85 percent saying they trust Private Brand just as much and 81 percent saying they buy Private Brand on every shopping trip. This is really bad news for branded grocery items.
Why?
The answer is quite simple. Consumers have become smarter than marketers. Why in the hell should they pay more for a brand when premium private label products are just a good and 20-40% less expensive.
A deeper dive might show that while brands analyze big data, consumers are individuals. The idea that you can segment an audience based on 4-5 key attributes is not realistic. There are too many micro-segments of consumers, and they believe that brands don’t give a damn about them as customers.
Will brands in grocery stores ever be relevant again?
I hear that question from a lot of clients. There is no one right answer. It really depends on the category and product. Amazon is leading the charge and recently introduced a new private label energy drink to challenge Red Bull and Monster.
However not all private label efforts are, to consumers, as reasonable as national brands. Costco’s private label beer, for example, is being roasted by online reviewers who say it tastes more like soap water.
The challenge for private label retailers is going to be to both ensure the product quality surpasses national brands while holding costs down.
