Private label

Two-thirds of shoppers say that store brands are just as high-quality as name brands

SUMMARY: Through an improvement in perception and offerings, private label products have become sought after instead of afterthoughts. In the past year, 55% of shoppers have made a private label purchase. The top reason for doing so was liking the product (56%), followed by the product being cheaper (52%).

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Two-thirds of shoppers say that store brands are just as high-quality as name brands

The death of national brands

QUICK READ:

  • With the accelerated sales growth of private-label consumer products annual sales are growing faster than national brand sales and have effectively disrupted the category.
  • Consumers are increasing their spending on private label products and have become “much more willing to splurge on store brands than they would for name brands,” according to Nielsen.
  • The success of store brands in the mass channel is posing a big challenge for national brands.
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The death of national brands

Private-label a major disruptor in the US consumer packaged goods

WHAT’S HAPPENING:

  • US private-label CPG sales growth accelerated from 2.2% in 2015 to 5.8% in 2018, according to IRI.
  • Major retailers have rolled out private labels across a range of CPG product categories. Target and Kroger have recently launched new CPG brands.
  • Retailers’ shopper data gives them an advantage in better understanding what consumers want, so they can launch private-label products to match.
  • CPG brand owners are fighting back by adding direct-to-consumer channels and boosting R&D spend for product differentiation.
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Private-label a major disruptor in the <b>US</b> consumer packaged goods

Grocery shoppers want more private label products

  • 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. 
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Grocery shoppers want more private label products

Private label is eating national brands for lunch

-Although Amazon has received much of the online private-label hype of late, Walmart’s brands sold nearly double the amount of products that Amazon’s brands did over the past year.

– Private-label apparel is growing as quickly as CPG products online.

-Private-label brands are creating a bigger divide between retailers and their suppliers. While just 5% of online sales comes from private-labels, they are growing at 65% year over year.

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Private label is eating national brands for lunch

Private-label gained 0.7% in sales, while branded products decreased 0.3%

It appears consumers are rewarding those retailers who have placed an emphasis on promoting quality in addition to value as part of their private label offerings. In fact, [inlinetweet prefix=”” tweeter=”” suffix=””]just under 74% of Americans report they believe store brand products are a good alternative to name brands[/inlinetweet], suggesting “own brand” programs that are equally differentiated by experience as by pricepoint are finally closing any perceived quality gap between national brands, a recent Nielsen report revealed.

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