Keep Those Store Brand Gains

Consumer interest in value and retailers' focus on store brands have provided plenty of incentives for consumers to increase their store brand purchases during the last few years.

Store brand unit share went up 1.8 share points (to a 22.3 share) from the end of 2007 to the end of 2008. Moreover, for the 52 weeks ending Aug. 6, 2011, store brand sales within food, drug and mass merchandise outlets reached $90.3 billion — an increase of 19.4 percent from 2007.

The gains were impressive enough for consumer packaged goods (CPG) brands to take action, stepping up their innovation efforts and promotional support to help stem share loss. The efforts contributed to a leveling off of store brand share gains in 2009 through the first half of 2011. CPG brand sales posted a respectable $420 billion, with a growth rate of 2.9 percent over the same 2007 through August 2011 period.

Future growth prospects are good

The upswing in consumers' store brand purchases can be attributed to enhancements in private label quality and value, as well as consumers' desire to save money during economically trying times. With the economy uncertain for the foreseeable future, retailers should focus efforts on seizing the opportunities created by increased consumer acceptance.

When weighing opportunities within the store brand space, retailers will want to keep in mind that:

• Store brands sales and shares are strongest in commodity categories (fresh eggs, milk, sugar/ sugar-substitutes, bread and baked goods, and cheese top the list) or in those in which some consumers perceive little differentiation (aspirin and some paper products).

• In a Nielsen study from April 2011, half of consumers told us they would be willing to buy more store brands if there were greater variety. The same survey found that about 40 percent of consumers trust store brands only from retailers they trust — so retailers with strong shopper equity could enhance their shopper connection through strong store-brand programs.

'With the economy uncertain for the foreseeable future, retailers should focus efforts on seizing the opportunities created by increased consumer acceptance.'

• A majority of consumers surveyed said they stick with store brands they like. Also, about half of survey respondents reported shopping certain stores because of the store brand items they carry. However, dissatisfaction with quality/value and issues with product availability were the most common reasons consumers cited for buyer fewer store brands.

• We see categories with strong CPG marketing support and a high level of innovation at the bottom of market-share-gains groupings where store brands are concerned. That said, some retailers have ventured into some of these categories and done well.

Key takeaways

Quality and value are the table steaks of a successful store brand program. With those components in place, retailers can expect a certain amount of consumer trust and loyalty.

But to further enhance their store brands' staying power, retailers should ask themselves several critical questions, including:

• Are we putting sufficient research behind our store brand efforts to ensure that launches meet required purchase levels to achieve a sustainable volume?

• Are we using trial programs as a key element of store brand merchandising activities?

• Do we have the right store brands for our key customers?

• And finally, are we incorporating shopper insights into our assortment and communication decisions to drive store brand and brand sales?

All of these efforts will pay dividends in the years to come.

Straight Talk delivers monthly store brand insights from Nielsen, New York. Todd Hale is Nielsen's senior vice president, consumer & shopper insights.