Agency study: Private brands add to a retailer’s value

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Agency study: Private brands add to a retailer’s value

By Dan Ochwat - 01/22/2020
This chart from The Integer Group's "The Checkout" study, shows which retail brands indicate value to shoppers.

Private brands have become so premium in nature that shoppers may not recognize them as being private label, according to a recent shopper survey from Denver-based retail agency The Integer Group.

The agency, a key part of Omnicom Group and the commerce arm of TBWA\Worldwide, has been publishing a regular consumer survey called "The Checkout" that looks at shopper behavior across retail channels over the past decade. The first study of 2020 focused on how shoppers perceive “value,” comparing results from 2009 to 2019. The study notes that “value” is a mix of “price” and “quality,” but what’s changed over a 10-year span is that respondents have placed more emphasis on “quality” than “price” when it comes to what makes up value. 

The study also questioned shoppers on specific retailers and brands and how they communicate “value” to shoppers. For Walmart, the retailer retained its leading value perception in the category of “stores” while Kellogg’s fell from first place in 2009 to third in 2019 in the category of “food.” Kraft moved up to first place.

While doing this research and looking closer at retailers, The Integer Group found that respondents named private brands as reflecting the value of a retailer, and they included those responses as part of the retailer’s response for analysis purposes. So, when the study talks about Walmart, 8% of the respondents who said Walmart is a brand that indicates value to shoppers actually put “Great Value.” The private brand was the retailer and its reflection of value to those respondents. By comparison, the study found fewer respondents recognizing Target’s private brands, including Market Pantry, Good & Gather or Up & Up.

The report decided that “private labels are more premium and have a higher perception of quality than they once did,” and that “it is likely that shoppers may not recognize private labels as such because these brands are increasingly being treated and marketed as brand names.”

The Integer Group shared some exclusive data from the study with Store Brands to further the point, saying that brand names have been a longstanding cue to shoppers for quality in a product. In 2009, just over 11% of respondents "agreed" or "strongly agreed" that "brand names are extremely important to me." In 2019, that number rose to 18.6%.

The difference is, according to The Integer Group, is that retailer own brands have increased in sophistication and are being treated as big-name brands. "It's much harder for shoppers to feel a difference in some categories so to them, while the brand name does matter, what doesn't matter is if that brand is owned by the retailer," the report said.

Craig Elston, global chief strategy officer, The Integer Group, told Store Brands that he sees private brands only getting more sophisticated in the future. "We will also see greater own-brand portfolio strategies and potentially wider distribution at retail banners outside of the parent retailer," he said.

He said that Target's Good & Gather launch is a good example of this sophistication happening now and one that is hard for the average shopper to distinguish from a national brand. "And, frankly, shoppers don’t care who owns the brand, as long as it is good," he said.

He continued to say: "Moving forward, private labels will continue to pressure national brands by being quicker to react to consumer trends and at the same time still providing satisfactory quality products at great prices."

Additionally, the study looked at channel fragmentation and how shoppers are splitting their shopping trips among multiple stores. For example, the study saw growth in store visits at dollar stores, grocers, c-stores and club channels, all garnering around a 6% increase in store traffic in the last five years.

For a look at the full report, click here.