News • 31.07.2018

Private brands make a big comeback

Launch of the examining consumer and business insights in private brands

Products of supermarket; Copyright: panthermedia.net/gurZZZa...
Source: panthermedia.net/gurZZZa

Private brand performance within the grocery channel dramatically increased in the past year, posting annual sales of $138 billion across multi-outlet plus convenience store retail channels in the United States in 2017, according to new insights from Food Marketing Institute (FMI) and IRI®. Still, supermarkets face major competitive challenges and are experiencing steady own-brand share leakage to other retail channels.

FMI and its insights provider IRI recently released the first half of a four-part series in their annual exploration of the Power of Private Brands — from the business side and from the perspective of the consumer. The “consumer” study focuses on insights into how to build engagement, while the “register” report reveals how the grocery industry can improve its private brand business.

FMI Vice President, Industry Relations, Doug Baker commented on the fact that 69 percent of consumers said it’s very or somewhat important to have a good assortment of private brands in food and beverage. He said, “Private brands have become full-fledged brands in their own right, and the research emphasizes the importance of not making assumptions when appealing to demographics and audiences, including how store brands are marketed and positioned. In fact, Generation X is responsible for 31 percent of all dollars spent on private brands across all outlets, compared to 19 percent each for older millennials and younger boomers.”

The research outlines consumer demand trends as well as a range of next steps for retailers, including how to further leverage the consumer’s desire for variety, and how to increase trial to battle any lingering negative perceptions. Retailers made considerable progress not only in reversing sales declines, but in closing the gap with national brands, supported by a reduced sting from deflation. But the news wasn’t all positive. Retailers outside of the grocery channel – including mass and club operators – have been performing much better in private label brands.

“While the news for private brands overall is good, there is a special hurdle for food retailers,” said Mark McKeown, principal of Client Insights for IRI. “We needed to uncover why the biggest growth is taking place outside the grocery channel. Our first step was examining the evolution of private brands into tiers and which of these were driving growth. We then took a closer look at how private brands are performing in specific categories and departments to address competitive challenges. And this year, we examined the different groups of private brands, including lifestyle (products that cross over categories and departments and deliver a common promise, such as clean label or organic) compared to regular (retailer banner brands that do not deliver a common promise) and how consumers perceived and purchased either.”

Source: IRI

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