With consumers reaping the unexpected windfall of collapsing gas prices, a new survey from Daymon Worldwide reveals that sizable percentages of shoppers will use the savings to purchase even more private brand products from retailers than they did before, creating unforeseen opportunities for retailers who can respond quickly.
This finding contradicts conventional wisdom, which suggests that consumers with extra money in their pockets will abandon private brands for national brands, and is a measure of how far private brands have come in closing the perceived quality gap between private brands and national brands, according to Daymon Worldwide.
More than one in three shoppers (35%) said they will not only continue to purchase private brands in the categories they already do, but will also expand their private brand purchases into new categories. Additionally, 22% of respondents, who identify themselves as “Experimenters,” will delve into new private brand categories for the very first time.
According to Janet Oak, Daymon Worldwide’s Head of Global Advisory & Custom Shopper Insights, numbers like these mean attractive sales opportunities for retailers ready to leverage their private brand offerings with high quality products and enticing innovation.
“With gas prices dipping to as low as $2 per gallon in certain markets, economists estimate that consumers are saving $200 million a day versus last year. With more money to spend in the grocery store, these shoppers are more willing to experiment with Private Brands on a deeper level,” said Oak. “Our survey confirms that private brands, when executed well, are not just for consumers looking to save money, but to spend it.”
According to Oak, consumers are open to deeper connections with their preferred retailers, and when savings like lower gas prices allow it, they’re more willing to experiment with new categories of private brands. In fact, 14 percent of respondents described their approach to private brand products as “Explorer” in seeking out and investigating new private brand options.
“Future growth of private brands will come from expansion into non-commoditized categories that are presently led by strong national brands, like carbonated soft drinks,” said Oak.
Additional findings show that only 33% of respondents will use their savings to switch back to national brands in some categories where they feel quality outweighs value. That is only slightly more than the 26% who said they will stay with the private brands they tried and liked, but don’t plan on purchasing private brands in new categories.
The commitment to private brands makes sense in the context of overall consumer priorities, according to the study. By minimizing their spending in the grocery store, consumers free up cash for other needs. Forty-one percent of survey respondents expect to use some of their new-found cash to pay bills, while 34% said they would increase the amount they put in their savings accounts.
Lower gas prices may not last forever, and neither will retailer opportunities to capture private brand fans, said Oak.
“It’s imperative that retailers invest in making their private brands authentic extensions of their banners by offering high quality products across categories, and in working with suppliers to introduce new products that tap into consumer trends and interests,” said Oak. “The opportunities are exciting and the time to act is now.”
Daymon Worldwide’s Custom Shopper Insights team recruited 1003 respondents (40 percent male and 60 percent female) to take an online survey Dec. 17-22, 2014, regarding their spending habits in reaction to dipping gas pump prices. Respondents were 18 years or older and had purchased a private brand product in the past 30 days. The respondents, 40% men and 60% women, were nationally representative across U.S. regions. For additional details about respondents and survey methodology, please visit www.Daymon.com.