It’s no surprise that store brand sales have increased the past few years. With the right marketing strategy, there’s no reason why that growth can’t be sustained as the economy improves. Nearly half of all consumers have given up their favorite brands to save money, according to a study by SymphonyIRI. The study also found that store brands have protected or grown their market share in three-quarters of the top 100 consumer package goods (CPG) categories in the past two years. Similarly, Nielsen Scantrack reported that from the end of 2007 to 2008, store brand shares jumped 1.8 percent to 22.3, and have held on since, despite an improving economy and increased promotion support from branded products.
“Store brands have reached a new share plateau and will see continued long term growth, fueled by both continued consumer interest in value, and retailer focus to drive margin and build banner equity,” says Todd Hale, Nielsen’s senior VP of Consumer & Shopper Insights. “Rising commodity prices could also make this a good year for store brands.” One of the reasons for this success is many retailers no longer have just one store brand. Whereas “store brand” once was synonymous with “bargain brand,” in the past decade retail marketers have become much more sophisticated about segmenting their customer bases. As a result, they now offer premium brands, as well as ones that compete with national labels in quality and price point.
“Retailers are creating many more tiered brands than they used to,” Hale says. Yet even with their sales growth, private labels are still well behind brand name products. In 2010, store brands accounted for 21.8 percent of units sold, with gains in all departments except dairy, dry grocery, and packaged meat. “However, this means that branded products still drive the vast majority of unit sales,” Hale says. One reason for this is that national brands’ marketing expertise gives them a significant advantage. “Store brand shares are the lowest among categories where we see strong marketing support for top brands like candy, gum, and beer,” he says, “and those like detergents, deodorant, and cosmetics, where a high level of innovation occurs.”