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%).
According to Bazaarvoice’s 2021 report “conveniently, the top two reasons shoppers choose private labels are also the two most common reasons shoppers become loyal to brands and products – they love ‘em (59%) and the products are well-priced (57%). Retailers who have stepped into the private label world are taking a strategic step, giving some of their suppliers a run for their money.
While large CPG companies control vast, global brands, some of the faster-growing product lines, strictly speaking, aren’t traditional brands. Consumers often are seeking healthier foods and greater transparency, and many of the private label brands are offering just that. The pandemic has resuscitated many large CPG brands while super-charging private label. In the battle of the brands, who will win? Could it sometimes be a brand with the name of a retailer on the packaging?
Grocery is the most popular vertical that shoppers will buy private label (56%), followed by home goods (47%), and apparel (41%). While 53% of shoppers have intentionally purchased private label products in the past year, the availability of private label products has also played a role in addressing global product shortages due to COVID-19. About 60% of shoppers report product shortages during the pandemic, most commonly for grocery and cleaning supplies. An added benefit for shoppers? Private label products can cost 20-25% less than the name- brand product on the shelf next to it.
Private label brands have not only shed their value image; some have even graduated to premium status. Private label brand owners that can respond quickly to this seismic shift in the market will be better positioned to thrive moving forward. But it’s often easier said than done. Companies need to adopt a nimble new product development process and foster better relationships with supply chain partners.
Brand failure?
In a lot of ways, YES! Consumers have changed, and that change has happened quickly, but too many brands are too big to read the signs of change and react. They’ll have weeks and months of meetings before they try and stop the slide in market share, but it’s already too late.
While some brands feel the future is eCommerce “almost half of shoppers say what they value most about an in-store shopping experience is the ability to touch, see, and try on products, followed by the instant gratification of taking home their purchases immediately (27%). And half of shoppers say shopping at a brick-and-mortar store is how they feel most connected to the brands they love, followed by leaving reviews (21%)”.
Stores like Target know this, which is why their private label products look like premium brands. More importantly, shoppers know that they’re paying brands for advertising and promotion, and they’re sick of brands who don’t listen to their needs.
Moving forward, brands need to get faster to be more competitive. Sure there is more risk, but the risk of waiting too long is lost market share that will cost a lot of money to get back.
Every marketing executive should be reviewing company processes to make them both faster and more relevant to skeptical consumers.
