Consumers have made a variety of changes in their shopping habits, but perhaps none has changed the retail landscape as much as their tendency to switch to less-expensive private label brands in lieu of national brands.
Nearly half of grocery shoppers (43%) bought more private label products in 2009 than they had in previous years, but more significantly, 86% do not intend to switch back to national brands when the recession ends, according to Hartman Group. In addition, 47% switched from a favorite national brand to a store brand. Of those, 42% are unlikely to switch back, 34% are on the fence, and 24% expect to switch back to their national brand when the economy improves.
Hartman’s Michelle Berry feels the switch has the potential to become permanent because “quality keeps them” as customers after the lure of lower prices has brought them into the fold. However, she adds that many retailers have rapidly expanded their private label offerings recently, which, without close attention to the development of each new product, may cost them the perception of quality they have established.
Overall, 36% of shoppers say they remain loyal to national brands, down from 40% only one year prior, according to BrandSpark and Better Homes & Gardens. BrandSpark’s Robert Levy says “Brands will have to make sure shoppers know why their products are worth a premium.”
Income Is A Factor
Households with annual incomes below $80,000 are more likely than those with higher incomes to have increased their purchases of private label products during the recession. Those households — 46% with annual incomes of less than $40,000 and 44% with incomes of $40,000 to $79,999 — are more likely than those with incomes of $80,000 or more (35%) to plan to continue to buy the same amount of private label products or more after the economy improves.
Their attitudes toward private label products also vary by income. Higher income shoppers are more likely than average to say they are loyal to brand name products and to believe product innovations are more likely to come from national brands than from store brands. Only a slight majority (53%) believe private label products are on par with the quality of national brands, and they are least likely to think private labels are a good value for the money.
The lowest income bracket is the least likely to say they buy the same brand names on a regular basis (63%); they are more focused on finding the cheapest price than checking brand names.
For all the positive opinions shoppers have toward private labels, only 18% go right for store brands, according to M/A/R/C Research. In fact, they are more likely to go right for the national brands and ignore store brands (22%). However, most (64%) first look for their usual brand then check store-brand alternatives, and 78% regularly compare prices between store brands and national brands.
There are reasons that shoppers avoid buying private label products. Nine in 10 (90%) have stuck with the national brand because it is simply a brand they trust, and 91% have done so because they could get the national brand on sale. The vast majority (84%) have bought a national brand because it offers varieties that are not available in the private label version. The most favorable opinion they have of national brands is that they offer more new products and varieties (57%).
During the rise of private label goods, packaging was often a concern, but it was rarely a factor in 2009, with only 31% of shoppers saying they chose a national brand over a private label brand because it offered better packaging. [Retail/Service Sector, Consumer Spending & Attitudes]
Sources: “American Shopper Study,” BrandSpark, Robert Levy, President, 1075 Bay St., #1002, Toronto, Ontario, Canada M5S 2B1; 647-727-4576; rlevy@brandspark.ca; www.brandspark.ca. Price: Call for information.
Better Homes & Gardens, James Carr, VP/Group Publishers, 125 Park Ave., New York, NY 10017; 212-551-7110; james.carr@meredith.com; www.bhg.com. Also Maxwell Bonnie; 347-429-1403; mbonnie@bestnewproductawards.com.
“Private Label 2010,” The Hartman Group, Laurie Demeritt, President, 1621 114th Ave. SE, #105, Bellevue, WA 98004; 425-452-0818, x106; laurie@hartman-group.com; www.hartman-group.com. Price: Call for information.
“In Focus: Name Brands,” The Checkout, January 2010, M/A/R/C Research, Merrill Dubrow, President, 1660 N. Westridge Cir., Irving, TX 75038; 972-983-0416; merrill.dubrow@marcresearch.com; www.marcresearch.com. Price: Call for information.
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