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Private Label Gaining Share of Wallet & Share of Mind
For the past 8 years, sales of private label consumer-packaged-goods have grown at a rate of about twice that of branded products. As reported in our annual ACNielsen U.S. Private Label Consumer report, this growth has been driven by increases in both the frequency in which U.S. households purchase private label and in the quantity that they purchase per shopping trip. An increasing number of households are becoming multi-category private label buyers and private label products are seeing growth outside of historically "over-developed" private label buying households. As retailers look to improve their profitability and retail consolidation continues in the U.S., we should expect to see continued growth of private label products at the expense of branded products. However, brands should not run and hide as they still account for the lion's share of sales across most U.S. retailers (notable exceptions from the likes of Aldi, Trader Joe's and Save-A-Lot).
ACNielsen has been working on a "ground-breaking" private label study with Daymon Worldwide, DemandTec and McKinsey. Final study results will be presented in Chicago at the Daymon Worldwide Forum scheduled for May 5th and 6th and at the FMI show on May 7th and 9th. The purpose of the ACNielsen portion of the study was to provide consumer research of behaviors and attitudes that demonstrate how retailers can build profitable customer loyalty and competitive differentiation though private label brands. We thought our F3 readers might like to see a sneak preview of our study results, so here are a few facts, figures and findings to peak your interest:
1. Retailers with greater focus on private label (i.e., those with higher overall private label shares) are driving solid buying behaviors and more positive consumer attitudes towards private label - particularly among those households who drive the strongest sales of private label products.
2. We fielded a 20 question survey to our ACNielsen Homescan Consumer Panel to understand household perceptions or preferences around private label versus branded products. Survey results were tabulated to understand differences in consumer attitudes within private label buyers who purchase in retailers with strong private label programs and within households showing strong private label commitment. To see what potential exists across households with low versus high "ability to spend", we also examined results within low versus top-spend "all-category" households. So what did we find?
a. When we asked households if "Store brands are a good alternative to name brands", we found that most households see private label as a good alternative. However, lower scores came from households who were top "all-category" spenders.
b. A closer examination showed higher scores among medium and high private label share retailers within the top-spend private label buyers. While this was not true for the other private label spending groups, it does illustrate that the better performing retailers (as defined by those driving higher private label shares) are driving stronger consumer attitudes regarding private label products. This finding was evident across a number of other dimensions related to private label perceptions and behaviors.
c. The lower ratings among top "all-category" spenders may suggest opportunities for retailers to focus efforts around more premium private label offerings. These lower ratings may also point out the strength that branded products have among a set of "most valuable" consumers who shop and buy in U.S. retailers. Whichever the case, these consumers will likely see plenty of attention thrown their way as retailers and brands look to capture their minds and wallets.
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