The Global Reach Of Store Brands
It's no secret that store brands have come a long way in the United States. From inconsistent quality to high quality, from bland packaging to innovative packaging, store brands really have come into their own. Consumers who might have thought twice about including store brands on their shopping lists years ago now regularly purchase store brands.
Store brands have really taken off in the United States, but what about other parts of the world? Let's take a look.
Sixty percent of consumers worldwide (in 55 countries within the Asia Pacific, Europe, North America, Latin America and Middle East/Africa) tell Nielsen they are stocking cupboards with more store brands as a result of the global economic downturn. Across the regions, Latin America leads the way, at 66 percent, and the Middle East/Africa/Pakistan area trails at 51 percent.
The highest levels of store brand purchase intent during the economic downturn were reported by consumers in Colombia (80 percent), Spain (79 percent), Portugal (74 percent) and Greece (70 percent), reflecting recessionary realities, depressed export activity and raging deficits.
What about staying power? Eighty-eight percent of shoppers globally said they intend to keep buying store brands even after the economy improves. While Latin America and Middle East/Africa levels were slightly less than the global average, at 83 percent and 79 percent, respectively, the overwhelming majority stil indicated they intended to pursue a value strategy.
Countries with the most store brand-conscious consumers include Austria, Germany and Sweden, all registering a better-than 95 percent intent to continue purchasing private label. Meanwhile, more than one-quarter of shoppers in the Ukraine (31 percent), Pakistan (28 percent), the United Arab Emirates (27 percent) and Venezuela (27 percent) indicated they had no intention of buying store brands in the future.
Store brands continue to show solid performance in most European nations. Thanks to massive consolidation among retailers and early investment in store brands, Switzerland, the United Kingdom and Germany lead the way, reporting 2009 store brand value shares of 46 percent, 43 percent and 32 percent, respectively. Consolidation has enabled companies to invest in product innovation, consumer research and marketing, all of which have contributed to strong store brand growth.
An examination of store brand success around the globe reveals two trends U.S. retailers should keep in mind:
• Product and package innovation is clearly one of the next frontiers for store brands. Retailers are recognizing that their store brands are an important physical extension of their overall brands in consumers' hearts and minds, and that consumer research and packaging improvements can pay off in increased sales.
• Values marketing is going to take off in a big way. While the focus on the traditional values of price, promotion, pack size and performance is still dominant, European retailers increasingly are aligning their store brands with the values of their customers. For example, European consumers are demanding a greater emphasis on company ethics, sustainability and transparency regarding the origin of products. As a result, more European store brands highlight organics, local sources, sustainable practices and ethics in their packaging and promotions.
The economic downturn prompted many consumers — around the globe — to try store brands for the first time. And once they did so, they discovered not only that the price was right, but also that the quality of the goods met or exceeded expectations. Regardless of the pace of economic recovery, retailers continue to have a tremendous opportunity to convert shoppers to store brands for the long-term.
Straight Talk delivers monthly store brand insights from The Nielsen Co., New York. Lisa Rider is Nielsen's vice president, product leadership. Contact Rider at [email protected].
Eighty-eight percent of shoppers globally said they intend to keep buying store brands even after the economy improves.