Purchasing private brands has become one of the most popular in-store money-saving measures. There is no doubt that the new economy has driven increased trial and usage of private brands, especially among higher-income shoppers. According to the Private Label Manufacturers Association (PLMA):
• Total store-brand sales in supermarkets stand at $59.9 billion.
• Nearly 1 out of 4 products bought in U.S. supermarkets is a store brand.
• Private-label dollar share is quickly approaching the 20% mark.
• Private brands in fresh categories grew by double digits.
• Store brands accounted for almost 90% of all new revenue in the supermarket channel.
Those are some impressive numbers. In addition to meeting the needs of the value-shopper, private brands offer a unique point of differentiation to the retailer. A store brand is one product that shoppers won’t find on competitor’s shelves. Loyalty to a particular store brand can foster loyalty to a particular store banner. Whereas in the past, store brands often emulated national brands in packaging, looks and flavor, retailers are now developing their own lines — often featuring multiple quality tiers. For example, our local H-E-B offers Hill Country Fare, HEB and Central Market private labels. With much improved selection and variety around the store, private brand offerings are easily recognizable and extend far beyond center-store items.
Despite strong growth, interest in private brands is not equal among all shoppers. Generally, lower-income shoppers and larger households buy private brands most frequently. However, a large gap exists between families with young children, who are above-average users versus families with older children who purchase private brands less than average. It seems national brand advertising dollars are paying off!
To read more about which types of customers are most likely to purchase store brands and effectively targeting those consumers most likely to switch, read our FMI-sponsored whitepaper.