Consumers Continue to Buy Private Brand As Economy Improves.

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Private Label Growth in Every Channel, with Grocery, Drug and Dollar Stores Leading the Charge

CHICAGO–(BUSINESS WIRE)–Today, the economy is showing glimmers of stabilizing, energy prices have receded, and food prices are increasing at a much slower rate, but the growth of private brands continues, creating strong opportunities for retailers and serving as a cautionary tale for manufacturers. According to the latest “IRI Times & Trends Report: Game-Changing Economy Taking Private Label to New Heights,” private label unit share has grown 1.2 points to 22.8 percent and dollar share has grown 0.7 points to 17.6 percent across all outlets in the past 12 months. Despite this success, two questions are emerging as the economy continues to improve: will shoppers continue to purchase private brands in ever larger quantities, and how will name-brand manufacturers respond?

“The popularity of private brands will continue as a result of several factors,” says IRI Consulting and Innovation President Thom Blischok. “These products offer a very strong value proposition based on quality as well as price. In addition, shoppers will continue their frugal shopping patterns long after the recession ends. And, retailers’ increasingly sophisticated private brand strategies will attract a larger and more diverse shopper base.”

Many private label brands, such as Target’s Archer Farms, Safeway’s O Organics and Supervalu’s Wild Harvest, are now viewed as similar, perhaps even superior, to brand named CPG products. In many categories, private brands are able to compete on quality as well as price, and retailers continue to increase the breadth and depth of their store brand offerings. Kroger, for example, is growing its brands across three tiers: private brands (premium tier), banner brands (mid-tier) and value brands (value tier).

Despite remarkable strides made during the past several years, private label sales are concentrated in the hands of a relatively small number of consumers. The top 50 private label categories, representing 17 percent of CPG categories, account for 69 percent of store brand sales. As a point of comparison, the top 50 national brands represent less than half of total dollar sales. Even heavy private brand buyers allocate just 22 percent of their CPG budget to store brands.

As consumers continue to look at affordability through a new lens, private label penetration in categories such as toilet tissue, ice cream/sherbet and butter are seeing substantial penetration increases. However, private label is losing share in 26 percent of the top 100 CPG categories, with national brands entrenched in categories, such as paper towels, weight control and cat food. And, national brands are gaining ground in key categories, including dog food, sugar and frozen plain vegetables.

The IRI report recommends the following strategic action be considered regarding private label:

  • Manufacturers should increase frequency of feature ad and display-based merchandising across key categories/brands with a heavy focus on affordability and unique product attributes.
  • Retailers should develop best-in-class marketing, pricing and promotion strategies to ensure maximum relevance and impact among fiscally weary U.S. consumers.
  • Manufacturers should evaluate partnership opportunities with key retailer partners to offer consumers solutions-based healthcare and meal solutions.
  • Retailers should consider multi-tiered product development efforts to drive appeal across a broad segment of the stores’ key consumer segments.

About the Report

The IRI Times & Trends Report, “Game-Changing Economy Taking Private Label to New Heights,” is available from IRI, the leading global provider of consumer, shopper, and retail market intelligence and insights for the consumer packaged goods (CPG), retail, and healthcare industries. The findings of this report were compiled based on IRI Consumer Network, IRI AttitudeLink, IRI Total Store Advantage and IRI Advantage on Demand. To download the report, visit http://us.infores.com/page/news/times_and_trends.



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Christopher Durham
Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.