As shoppers feel their ability to afford everyday expenses is declining, private labels are helping them manage their budgets. Reported private label nonedibles and personal care, health, and beauty purchases are rising across retailers. An increasing number of shoppers, including lower-income shoppers, can afford organic products by buying private labels instead of national brands.
While brands talk about how to market after the pandemic private label sales are multiplying, and the demand for private labels is also strengthening due to frequent stock-outs since nearly half of shoppers switch to private labels when the national brand is out.
Price remains a top specific choice driver for private brand purchases, but experience with a brand/retailer and trust drive more purchase decisions in aggregate. I private label Amazon and Target over-index for premium private-label offerings, while Sam’s Club and Amazon stand out for innovation.
I’ve always believed that many brands believe their brand propaganda too much. They have been raising profits, raking in dollars, and shrinking product portions, adding to consumers’ frustration about the economy.
2021 was the most profitable year for American corporations since 1950. Pro surged 35% last year, according to data published by the Commerce Department on Wednesday, driven by strong household demand, which was underwritten by government cash transfers during the pandemic. In all four quarters of the year, the overall profit margin stayed above 13%, a level reached in just one other three-month period during the past 70 years, and consumers noticed.
As prices keep rising, some consumer demand is cooling, and shoppers are starting to trade down. Grocery executives said that Peo le are buying fewer items while searching for more deals and switching to cheaper private-label brands. Analysts said that low- and middle-income consumers are buying more store brands, which tend to be more affordable. U.S grocery sales grew 6.4% while declining 4.1% in terms of units sold, for the five weeks ended April 2, according to NielsenIQ.
Regaining lost customers is going to be a challenge for a lot of brands. Buyers are already resetting aisles to highlight private label cost savings. The same old advertising will not compensate for smaller product sizes, and higher prices as consumers must dig deeper into their savings to make ends meet.
For many brands, their brand equity is overvalued.
