As if we needed more evidence of the ascendance of Private Brands – the advertising trade magazine AdAge continues to devote significant editorial space month after month to our evolving profession. This week it comes in the form of an article titled, “Grocery Shoppers Continue to Spend Less, Embrace Private Label, High Gas Prices, Sluggish Economy Means Families Keep Cutting Budgets and Forgoing Big Brands.”
The article in a arrogant nod to CPGs begins: “Marketers beware: Grocery shoppers are as stingy as ever, making fewer store trips and spending less, while warming to private labels and aggressively seeking deals and discounts…” retail marketers take note and take the power that is abdicated when you are underestimated.
The article goes on to say:
“according to a new report by Acosta Sales & Marketing, a leading sales, marketing and merchandising company.
Burdened by high gas prices and sluggish economic trends, only 23% of shoppers expect to spend more this year compared with 2010, while 13% will cut their budgets and 63% will spend about the same, according to Acosta, which conducts a survey twice a year of a panel of 8,500 U.S. households. Shoppers have already cut their spending, with the average monthly grocery bill dropping to $279 per household in February. That’s down from $298 a year earlier, including food and non-food items, according to the survey, called “The Why Behind the Buy.” The drop is significant, considering that marketers this year have increased prices in many categories to contend with rising commodity costs.
“While the recession might be over, the recovery hasn’t really begun,” said Ramin Eivaz, chief marketing officer for Acosta, which represents 60% of the top consumer-packaged-goods brands. “Shoppers are very, very careful and watchful and they are not shifting their smart, value-seeking behavior because the uncertainty is still quite high.”
For big ad spenders, the most disturbing trend might be the continued strength of store brands. The survey found 54% of shoppers saying they buy “a lot” of store brands to save money, while 41% said about half of all purchases are store brands. And there are signs that private-label loyalties are here to stay. Nearly 30% of shoppers said they plan to stick with store brands even if their financial situation improves. At the same time, younger generations seem more accepting of the products, with 52% of those age 18 to 44 saying private label is “a better value” than branded products, compared with 46% of shoppers 45-54 and 47% of those 55 to 64, according to the survey.
Private-label sales jumped 1.7% in the year ended May 14 and now command 17.6% of all store purchases, up from 16.9% two years ago, according to Nielsen. Meantime, sales of branded goods dropped 1% in the last year. “