Is Europe the Future of Private Brands in the US

This post comes from the Neilsen blog Neilsenwire and was originally printed in Food Technology magazine.

Lisa Rider, Vice President, Product Leadership

In the past 20 years, store brands—otherwise known as private labels—have come a long way in the United States. When store brands were in their infancy in the 1980s, product quality was inconsistent and packaging was either generic looking or designed to mimic the leaders in a given product category. It’s a much different story today.

Over the past several years, retailers have invested in quality improvement, product and packaging development, and marketing their store brands, making them one of the few bright spots in the current retail landscape. At The Nielsen Co., we measure what consumers watch and what consumers buy and our research shows that store brands represented 21.8% of unit volume in 2009 while only comprising 10% of items in stores.

In contrast, economy national brands made up 21.3% of sales, while taking up 29.7% of items in stores. Consumers, who might have thought twice about including store brands on their shopping list years ago, now regularly purchase store brands, seeing them as a good value for certain grocery and household goods. The recent surge in store brand sales has a number of retailers wondering what’s next. What will the future hold for store brands in the U.S.?

The Future Is … Europe
To see the future of U.S. grocery store brands, we need look no further than Europe. Thanks to massive consolidation among retailers and early investment in store brands, some European retailers already report over 40% of store sales coming from store brands, according to Europanel.

Consolidation has enabled companies to invest in product innovation, consumer research, and marketing, all of which has contributed to strong store brand growth. In comparison, the retail universe in the U.S. is much more fragmented, and the most successful retailers tend to have 20–30% of sales coming from store brands, highlighting a significant opportunity for growth. Examining what European retailers have done and are doing to drive growth can provide clues to what could be in store for the American market.

Download the complete article “The Future of U.S. Store Brands” which originally appeared in Food Technology magazine.

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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.