This release from Daymon Worldwide highlights the publication of their new report on Private Brands and the recession, “The Maturing US Recession & Implications for Private Brands.” There is no question that the current economic situation has facilitated the rapid growth of Private Brands this report looks at the recession and the projected recovery’s impact on Private Brands.
“For Private Brand retailers and manufacturers, the challenge is to fully grasp this opportunity and deal with the recession fact-set even after the recession. There is much to be done to meet this challenge. Private Brand programs are not monolithic, and the best approaches and solutions will not be, either.”
Alex Miller, President – Daymon Worldwide
Post-recession with recession-like traits
Suggests crucial role for Private Brands
The current recession continues to set records, as measured by economic indicators, the combined effect on world economies and the impact on consumers facing an economic crisis unprecedented in their lifetimes.
In “The Maturing US Recession & Implications for Private Brands,” Daymon Worldwide Inc., the world’s leading Private Brand Broker and Consumer Events expert, provides perspective on the downturn and its meaning for consumers and Private Brands.
According to Daymon President, Alex Miller, “In a nation where consumer spending accounts for 70% of the GDP, and where food is the second largest expense in the family budget behind housing, absolutely Private Brands are on the front burner of every retailer during this recession.”
The most severe downturn in more than sixty years has created a “perfect storm” for American consumers, combining historic losses of personal wealth ($11.1 trillion in 2008), record home foreclosures (nearly a million in the same year) and job losses topping the seven million mark since December 2007. Before the recession, annual losses of 3% in US manufacturing employment were considered alarming. Now, some industries have shed over a quarter of their jobs in less than two years.
Believing that the US economy will show GDP growth for Q3 2009, bringing the recession technically to a close, Daymon sees complications to recovery on the consumer side. These include persistent unemployment, expected to climb from September’s mark of 9.8%, and the related effect on median household income, which declined 3.6% for 2008 and is predicted to drop more. Higher taxes and higher interest rates are looming as well, putting more pressure on household incomes. “As a consequence, consumers will feel as much or more of a squeeze on their incomes during recovery, and perhaps afterwards, as during the recession itself,” says Ron Shirk, Global Research Manager at Daymon Worldwide and author of the report.
Private Brands have certainly done well in the recession. In its September issue of Times & Trends, Information Resources Inc. (IRI), reports that unit share for Private Brands grew 1.2 points for the 52 weeks ending in July, reaching 22.8% overall and 25.6% in grocery. Looking ahead, continuing financial strains for the economy and consumers mean that Private Brands will not easily relinquish any of their recessionary gains. Instead, signs point to a post-recession where “learned” shopper behaviors are likely to be extended and may well become entrenched over the long term.
For Private Brands, the prospect of a protracted recovery and a post-recession with recession-like traits presents opportunities and challenges. Daymon finds that Private Brands are shaping up to be a focal point of retail strategy and a key differentiator for retailers. This is true not only from the perspective of retailer performance, but in the minds of consumers as well, with smart shoppers looking for the best Private Brands.
“For Private Brand retailers and manufacturers,” says Miller, “the challenge is to fully grasp this opportunity and deal with the recession fact-set even after the recession. There is much to be done to meet this challenge. Private Brand programs are not monolithic, and the best approaches and solutions will not be, either.”
For more information on the “The Maturing US Recession & Implications for Private Brands” report, or to speak with a Daymon executive, please contact Tim Davis, Director of Corporate Communications, Daymon Worldwide, (203) 352-7678.