The brand-switching opportunity
The COVID-19 pandemic has underscored something that more and more shoppers learn every day: the benefit of private brands.
At the height of the pandemic, units flew off shelves as consumers stocked up for the unknown future ahead. This contributed to out-of-stocks across all categories, forcing consumers to substitute their typical preferences with available options. In addition, with the pandemic affecting nearly one-third of U.S. families financially, income constraints presented further challenges for shoppers. These conditions presented the perfect opportunity for private brand trial — traditionally one of the largest roadblocks towards growth and loyalty for private brands.
With shoppers turning to retailers to provide cost-effective and alternative solutions, private brand growth outpaced national brands with 19%, compared with 17% national brand growth during this time. In fact, 70% of shoppers reported purchasing a different brand than they had pre-COVID, with nearly 30% reporting positive experiences from brand switching and plan to permanently commit. Our research shows that once private brand trial is initiated, consumers will continue to shop at specific retailers for their private brand offerings.
However, consumer affinity towards private brands is not a new trend. Even before the pandemic, only 6% of shoppers were exclusively purchasing national brands. Our research shows private brands were already well positioned for growth, as 86% of shoppers viewed private brand quality as equal to or better than the national brand. The pandemic accelerated this growth with increased trial, providing room for retailers to gain loyal shoppers.
Retailers have the opportunity to capitalize on this increase in trial by encouraging consumers to continue shopping within the portfolio. In addition to educating consumers on the value proposition and assortments within private brand, there are key consumer needs driven by the pandemic that present crucial areas for retailers to showcase private brands as solutions. Three of these key areas are continuing to innovate against consumer needs, providing meal inspiration and education, and establishing a borderless online to in-store experience.
First, retailers should continue to innovate within their private brands to encourage additional trial within the program. Even with the increased focus on value, our research shows that consumers are still looking for differentiated solutions that match their lifestyle, such as within health and wellness. For example, 80% of consumers are currently focusing on what they consume as part of taking care of themselves, with 77% looking to lead a healthier life than pre-pandemic. Retailers should prioritize continued new product development against these and other consumer needs, and focus on educating shoppers via merchandising, marketing, and promotions about these new items. This will allow shoppers to branch out to new products in your portfolio while accentuating the solutions that private brands offer beyond savings.
Another way to proactively reach consumers is by providing meal inspiration that leads with private brand offerings. Initial dining out restrictions from the pandemic has altered eating behavior, with consumers eating at home more frequently and nearly 6 in 10 expecting to continue this trend into the future, especially as restaurant restrictions persist. The increase of home cooking has consumers seeking meal inspiration to keep mealtimes exciting, as well as looking for education on how to expand their repertoire. Retailers should also enhance meal solutions available to purchase by addressing various skill sets; combinations of ready-to-eat, ready-to-heat, and meal ingredients can help consumers integrate new items and ideas even if they are first-time cooks. As the pandemic continues, retailers must consider how to expand this inspiration and engagement to stay continuously relevant, such as through online cooking classes, expert partnerships, and incorporation of seasonal needs.
Finally, concerns over health safety and maintaining social distancing measures has consumers shopping in less stores in favor of e-commerce purchasing. In fact, our consumer research among private brand buyers shows that 7 in 10 will continue the increase of online purchasing. Given this shift to online, retailers should ensure their private brands are represented and elevated via this platform the same way they would be positioned as solutions in-store.