Categories
Nielsen

Eleven Ways to Grow Private Brand!

\"cart7\"In what is shaping up to be an ongoing conversation about Private Brand, Tom Pirovano, of The Shopper Wonk posted a response to his earlier top ten list on protecting your brand from store brand expansion. I then wrote a post responding to his top ten list with my own. The below article is his top 11 list for growing store brands. To which I will simply say Amen!

11 Tips for Retailers to Grow Their Store Brands
I recently shared some thoughts on how CPG manufacturers can protect their brands from private label expansion. It didn’t take long to hear back from retailers asking for tips on growing their own brands. Here are a few private label ideas for our retailer friends.

  1. Study the category consumer before going upscale.
    Consumer understanding is the common thread among top-selling brands. It’s not enough for a retailer to roll out a quality product in premium packaging.
  2. Disguise your premium store brands.
    Many consumers still associate private label with cheap knockoffs. There – I said it. But what if they don’t know it’s a store brand? Look to position premium store brands as exclusive products like Choxie at Target and Canopy at Walmart
  3. Get your pricing right.
    The price gap between store brands and national brands varies significantly across categories. The same shopper who chooses private label bottled water for a 3% discount may require at least 20% savings for private label barbecue sauce.
  4. Offer multiple brands in multiple tiers.
    Although Costco may be the exception, most retailers are finding growth with multiple store brands. No one brand can stand for value and gourmet and healthy eating.
  5. Eliminate weak links.
    One bad product experience can hurt the entire store brand, not to mention the retail banner itself. Product quality needs to be consistent across each store brand. Your brand’s perceived quality is only as good as its weakest SKU.

Read all 11 Tips.

Categories
Consumer Reports NPD

70% Highly Satisifed With Private Brand

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In a post late yesterday Consumer Reports Blogger Tightwad Todd reported that a “New survey reaffirms what we\’ve been saying about store brands” He goes on to discuss the NPD survey I blogged about last week “25% of All Americans Buy Private Brands” quoting the press release from NPD:

“There is no question that private label foods have become an integral part of American life,” said Harry Balzer, chief industry analyst at NPD and author of Eating Patterns in America.

He goes on to say:

In our just-released Supermarket Ratings report, 66 percent of respondents told us that they’d bought store-brand products in the past month. Overall, 70 percent said they were highly satisfied with the quality of store brands they\’d purchased.  Increasingly, stores are putting their own names on prepared meals, cold cuts, baked goods, fancy sauces, and organic goods in addition to the usual canned fruit, frozen veggies, and paper towels. Over the years, Consumer Reports\’ tests have found many store brands to be at least as good as national brands. So if you haven\’t tried store brands before, now\’s as good a time as any. Best of all, most come with a satisfaction guarantee. If you don\’t like what you buy, bring it back for a refund.

Over the last few years Consumer Reports has consistently recognized private label products and this report simply reaffirms that.

private label, store brand

Categories
Nielsen

6 Types of Private Brand Customers

This is an intriguing post from Todd Hale, TheShopperWonk, SVP, Shopper and Consumer Insight with The Nielsen Company. They have done some great work to create segmentation identifying Private Brand customers.

If You Thought All Store Brand Buyers Were The Same-Think Again!
\"groceryshopper\"2008 was a stellar year for store brands in the U.S., with both dollar and unit growth outpacing branded offerings across consumer packaged goods (CPG) categories. Store brand dollar sales within food, drug and mass merchandisers grew 10.2% for the year, while branded dollar sales grew by just 2.6%. Although the gap in unit sales was not as wide, indicative of how store brand dollar growth resulted from inflationary pricing across a number of commodity-based categories, store brand units grew 2.6% for the year, but branded units were off 2.2%. And what should be keeping many branded marketers and sales execs up at night is how store brand unit sales performance was better in the last quarter of 2008 and even better in the last period of the year. This is a pattern which has continued for the first quarter of 2009 and should continue throughout 2009 as our economy continues to struggle with high unemployment and a tough housing market.

Client questions we are frequently being asked these days concern the current and future performance of store brands. The most prominent questions are:

  1. Does this growth rate reflect what we typically experience in a recessionary period?
  2. Will store brand growth slow once the economy improves or are we entering a new era of store brand development in the U.S.?

Store brand growth during 2008 is very similar to the gap in sales growth during the 2001 recession. However, with the additional efforts retailers are making to improve store brand packaging, quality and on-shelf presence, we do see store brands being better positioned for growth when the economy improves than they were at the end of previous economic downturns. What may be even more indicative of future performance is the marketing brains and muscle many retailers are putting behind their store brand go-to-market efforts. So consumers forced or enticed to purchase store brands during this recessionary period may be more likely to add store brands to their preferred set of brand choices on a go-forward basis-particularly given how complete and absolute loyalty to a brand is a rarity, usually coming from a small percentage of infrequent brand and category buyers. Most households trade off across a select number of brands depending on their propensities toward flavor, form or size mix and/or the importance they place on promotions and price specials over brand choice.

Now more than ever, marketing to the average consumer or shopper will yield little benefit, as understanding the extremes provide real insights for action. With that in mind, we created a store brand segmentation scheme among our Nielsen Homescan consumer panel. The scheme used actual brand and store brand buying behavior; actual behavior regarding retail channel and retailer shopping preferences; and consumer attitudes towards store brands to identify six unique store brand segments. Understanding which of the segments are drivers of store brand share growth, and the attitudes of those consumers, can help predict the degree of longer-term impact (at a macro and individual category and brand level) and should weigh heavily into plans for how both manufacturers and retailers should plan future growth.

Read the entire post to learn about the 6 Private Brand customer segments.

Categories
IRI

Private Brand Trends in a Tough Economy

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In the last few days I have received a slew of press releases on exciting research about Private Brands. The below release from IRI gives a peak into their new report on emerging trends and key success factors for Private Brands.

New IRI Private Label Report Uncovers Emerging Trends and Key Success Factors in Challenging Economy

CHICAGO–(BUSINESS WIRE)–Private label share in the United States has risen dramatically across retail channels and product categories during the past two years as consumers continue to struggle with high food prices and other economic pressures. According the latest research from Information Resources, Inc. (IRI), \”The 2009 Private Label Report,\” this trend is expected to continue through 2009 and beyond, representing an unprecedented opportunity for retailers and a threat for branded manufacturers.

\”With budgets strained to the breaking point, shoppers are scrambling for ways to save money,\” says IRI Consulting and Innovation President Thom Blischok. \”Shoppers are looking through a lens of affordability and have a re-invigorated interest in private label since the economic turmoil began. The need for affordable packaged goods solutions is high, and private label products are going a long way toward answering that need.\”

\”Since many private label products are truly becoming mainstream these days, IRI refers to these products as private brands, such as Target\’s Archer Farms, Safeway\’s O Organics and Supervalu\’s Wild Harvest to name a few,\” adds Blischok. \”The retailer halo is now foundational, and private brands are becoming as familiar and relevant as national brands in some categories.\”

The IRI Private Label Report provides a thorough review of private label performance and best practices across channels, categories and retailers as well as current viewpoints from more than 1,500 consumers. The study also takes an in-depth look at the opportunities that exist for retailers and how branded manufacturers can more effectively compete against private label in a tough economy.

The following is just a glimpse of the private label insights found in the report:

  • Guidance is provided to retailers on \”where to play\” and \”how to play\” in key growth hot spots for private label. For example, private label\’s strongest growth performance tends to be such categories as cream cheese/spread, paper napkins, refrigerated entrees and shortening and oil to name a few. Developing categories include pet supplies, cold/allergy/sinus tablets, refrigerated salad/coleslaw and salad dressings.
  • Drivers behind the highest performing regions and markets was also analyzed and revealed that grocery channel private label share is highest in the West at 25.2 percent and lowest in the Northeast at 19.2 percent for U.S. regions. For individual U.S. markets, Wichita, Kansas had the highest share of private label unit sales at 34.3 percent in 2008, and New York City had the lowest at 14.2 percent.
  • Four out of five shoppers are now \”sold\” on private label quality indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products.
  • Although nearly 80 percent of shoppers in 2008 have positive attitudes towards private label versus 73 percent in 2007, dollar and unit shares are still below 25 percent.
  • In personal care categories, branded manufacturers have successfully differentiated themselves in the minds of shoppers, which has made it difficult for retailers to successfully penetrate these categories with private label.
  • Consumers\’ perception of private label quality is consistently high across U.S. regions and channels. Some regional variations do exist, which are driven by best-in-class regional retailers.

\”The evolution of the U.S. private label market has accelerated in the face of growing financial turmoil,\” says Sean Seitzinger, senior vice president, IRI Consulting and Innovation. \”As shoppers opt out of some products and stores, they will opt into others. It is critical for the ongoing success of CPG manufacturers and retailers to not only react to, but anticipate these trends and be ready with products, assortments and store layouts that meet the shopper\’s changing needs.\”

IRI Private Label Webinar
IRI is offering a free webinar, entitled \”Key Success Factors in Private Label\” on April 22 at 10 a.m. CDT. To register for the webinar, hosted by consumer trends and private label expert Sean Seitzinger, please visit http://us.infores.com/NewsEvents/EventsWebinars/KeySuccessFactorsinPrivateLabel/tabid/221/Default.aspx.

Categories
AdAge NPD

Private Brand Growth & the Recession

Private Brand is everywhere and the major trade magazines seem to be no exception, Advertising Age seems to regularly include articles about Private Brand. The article below features the NPD report I published earlier as well as comments from Bill Schober, editorial director of the In-Store Marketing Institute.

Don\’t Blame Private-Label Gains on the Recession
No-Names Brands Have Been Picking up Momentum for Past Decade Across Demographics

By Emily Bryson York

CHICAGO (AdAge.com) — Private label growth didn\’t start gaining momentum in the downturn.

\"grocerybag2\"Not only have private label brands been gaining share for the past decade, experts say these gains are the single-biggest problem facing branded packaged goods players. House brands, once a staple of lower-income households, now enjoy roughly equal penetration among demographic segments. Improvements in quality and packaging have helped removed the stigma attached to buying a no-name product.

According to an NPD study released today, house brands now make up 24% of all food and beverages served in U.S. homes, up from 18% in 1999. Stripping away beverages, private label accounts for roughly 30% of all food served in U.S. homes. And 97% of households purchase unbranded products from time to time.

\”This is a trend, but not just because of economic difficulties,\” said Harry Balzer, chief industry analyst at the Port Washington, N.Y.-based research firm. He said that private-label consumption appeared flat over the past year. Survey participants told NPD that they chose private labels because of price and value, but many also felt the quality is similar — if not superior to — name-branded products.

Read the entire article