In an April 20th, 2009 post on Nielsen Wire, Tom Pirovano, Director, Industry Insights, he outlines the state of the industry and presents five things to expect from national brands. I think he not only hits the nail on the head for national brands, but also presents the areas of opportunity for retailers as they develop their Private Brands.
National Brands Must Innovate To Win Back Store-Brand Shoppers
Sales of store brands, or private label products, began to spike in 2007 just as we were seeing the first signs of an economic downturn. At first, these private label sales were driven by higher commodity prices, but volume growth began to catch up with dollar growth in mid-2008. As the economy continues to struggle, more and more consumers are replacing their branded products with private label equivalents. Store brands are up 10% to $84.4 billion in annual sales across categories reported by The Nielsen Company. Talking to Consumer Packaged Goods marketing professionals across the country, there is a consensus that these private label switchers won’t be coming back when the economy improves – at least not without some incentive.
Winning back these shoppers will not be easy for branded manufacturers. Although many will be tempted to cut back on new product development, now is the time to innovate.