A recent Brandweek article titled: "Consumers Have Appetite for Unbranded Pizza, Snacks" raised some intriguing questions about the direction in which consumer products are headed.
While the article focused on specific categories where private label brands have made inroads in this tough economy, there was a more important, secondary storyline here.
The core of the well-written article discussed the huge inroads made by private label brands during 2009. Not surprising, given consumers' belt tightening over the past year.
Consumer product categories where national brands were most vulnerable, and store brands picked up the most share include baby food, frozen pizza, snacks, salad dressings/mayonnaise, detergents, candles/incense, cheese, fresh meat, detergents, to name a few.
According to Nielsen Co., private label sales units rose by 5.3% during the 52 week period which ended on October 3rd. During the same period, branded packaged consumer product unit sales fell by 2.3%.
The article focuses on the hot debate in consumer product marketing circles about whether consumers are discovering or rediscovering store brands. On whether private label sales are moderating. On how consumers are being impacted by national brand advertising that appeals to their emotions, great value and brand heritage. Kraft Macaroni & Cheese anyone?
Retailers have learned quickly. Major players like Wal-Mart, Target, 7-Eleven and myriad others have ramped up their private label brand offerings, as well as marketing support for those brands.
But here's the most important development in my view. "The Hartman Group's research showed that the majority of the 43 percent of Americans who tried private label products in the last year plan to continue purchasing store brands".
Michelle Barry, senior vp at the Hartman Group, commented that shoppers "aren't just leaving the general brands; they're leaving their favorite brands as well." This turn of events prompted by the fact many consumers have been pleasantly surprised by the quality of private labels. In fact, many have said store brands exceeded their expectations.
This turn of events necessitates new strategy on the part of well-established national brands. None are immune. While it is acknowledged that "Well-positioned brands that cover the category well in terms of benefits and expectations will be far less vulnerable to private label," as Eric Schwartz, vp at Henkel, which produces value detergent Purex; there is still cause for concern.
Even the mighty Procter & Gamble, whose Tide detergent brand continues to own over 50% of the laundry detergent category, trotted out "a basic version of its premium-priced Tide detergent brand." I think this should give us some pretty strong indications about current consumer product trends.
- Have you, as a consumer, been experimenting with store brands versus national brands you've always used and favored?
- As the economy improves, do you plan on switching back to national brands or will you stick with the store brands you've been using?
- In which product categories are you more likely to experiment and switch to store brands?
- How do you think national brands should counter their sales erosion, or potential sales losses, in response to the growth of private label brands?
I'd love to hear from you.
Continue reading "Stick With Store Brands Or Go Back to National Brands? That Is The Question." ... Read the full article
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