92% of Millennials Turn To Private Brand: IRI Private Label 2018

The latest  IRI Private Label 2018 report reveals that eight in 10 Americans buy private brand products frequently or occasionally in order to save money.

Private brand products are popular with younger consumers, who tend to be driven more by product benefits than by brand name. 92% of millennials are turning to private brands to save money, compared to 86% of Generation Xers, 81% of baby boomers and 77% of seniors.

Susan Viamari, vice president of Thought Leadership for IRI

“The increased likelihood of younger consumers turning to private labels really bodes well for the retail brand sector of the industry,” said Susan Viamari, vice president of Thought Leadership for IRI. “It’s truly a testament to the success private label innovators have had in bringing to market the solutions that fulfill high-demand shoppers’ needs and wants.”

The report further highlights millennials’ financial stress. The Index, which monitors consumers’ financial health and CPG behaviors for factors such as brand loyalty, attitudes toward organic/natural foods and beverages, perception of national compared to store brands and frequency of using retailers’ and manufacturers’ coupons, came in at 97.6 for Q3 2018 for all consumers. This is up slightly compared to Q3 2017 (96.8). However, the current index for millennials is noticeably lower at 94.5 compared to 94.7 in Q3 2017. With a benchmark score of 100, a Consumer Connect Index score of more than 100 reflects consumers who are less price-driven, more loyal to favorite brands and better equipped to maintain their desired lifestyles without changes.

In addition, it is still hard for many to buy groceries, with 33% of all consumers having difficulties, compared to 38% of millennials, 42% of Gen Xers, 34% of baby boomers and 19% of seniors.

Consumers continue to embrace private brands even though the economy has stabilized. 69% say private label quality is as good as national brands, and 68% say private labels offer better value than national brands. Millennials, in particular, have very favorable views of private labels, with 76% saying the quality is as good, and 73% saying the value is better.

These viewpoints are making a positive impact on private brand dollar sales, which increased 5.8% compared to 1.5% for national brands during the past year. In addition, private label unit sales increased 3.8% compared to national brand unit sales decreases of 0.2% during the past year.

And it doesn’t stop at quality and value; consumers are selecting which stores they will shop in based heavily on the assortment of private brands offered. The criteria include:

Millennial Total
Good assortment of private label food/beverage solutions 82% 77%
Good assortment of private label home care solutions 68% 62%
Good assortment of private label healthcare solutions 67% 59%
Good assortment of private label personal care solutions 67% 57%
Good assortment of private label beauty care solutions 53% 45%
Good assortment of private label pet care solutions 39% 34%

 

There are still a lot of untapped opportunities for retail channels. During the last year, grocery private label performance has underperformed compared to the industry average, with dollar sales growth of 1.2% and unit sales declines of 1.7%. Within grocery, though, some retailers are showing momentum, such as Fred Meyer and Jewel Osco.

Dollar Sales % Chg. vs. YA Unit Sales % Chg. vs. YA
Total CPG -2.1% +0.5%
National Brands +1.5% (0.8%)
Private Brand +1.2% (1.7%)

Club stores are outperforming grocery and all competing channels. This is driven by increases in private label trips and basket size:

Trips % Chg. vs. YA Basket % Chg. vs. YA
• Club +2.5% +3.3%
• Grocery (0.3%) +1.2%
• Drug +6.8% (6.2%)
• Mass/Super (5.1%) +2.9%
• Dollar (0.3%) (0.9%)

The future looks bright for private brand, with two-thirds of consumers planning to buy more private label products in the coming six months. This is more prevalent among younger shoppers:

• Millennials 73%
• Gen Xers 71%
• Boomers 63%
• Seniors 54%

“Private brands are not all about price,” added Viamari. “They are evolving with innovation and offer the quality, packaging and assortment that shoppers are seeking. Consumers are looking for more choices, and those retailers and manufacturers who are adjusting their strategy to meet those needs will see greater success.”

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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.