“We genuinely are in a golden age for store brands,” says Wisner, the president of Wisner Marketing in Lake Forest, Ill. “And it is one that, quite honestly, there are very few headwinds and a lot of tailwinds.”
Recent numbers support this: Across lower-, middle- and higher-income levels, store brands are outpacing national brands, seeing roughly 5% growth at each income level in total store sales versus a year ago, compared to national brands seeing just over 1%, according to a November report from the Food Marketing Institute (FMI) and IRI. In that same report, annual gains from private brands far exceeded those of manufacturer counterparts across store departments, too. Refrigerated foods saw a 6.5% bump versus a mere .3% bump by national brands; general merchandise increased by nearly 8% while national brands dropped a third of a point.
IRI, in a “Consumer Connect Survey” released last month (see more on page 5), found that nearly 60% of consumers felt their households were in good financial shape, dispelling any economic downturns driving sales of private brands. In fact, 65% of households making at least $35,000 annually felt groceries were easily affordable. Not surprisingly, the percentage grew as the income levels per household grew.
The IRI study found consumer attitudes shifting toward private label, noting that two-thirds of consumers felt store brand products were as good if not better than the national versions, and that private label has an impact on why a shopper chooses a store to shop. More than half of the Gen Z and millennial shoppers said they picked stores to shop based on their private label offerings, according to the study.
“For the longest time, private brands were always price driven — price, price, price — so as long as you were following the brands fast, you were successful,” says Doug Baker, vice president of industry relations at FMI. “They’re no longer a private label. They are now a private brand. Consumers see them the same way they see PepsiCo, Frito-Lay, Kellogg’s, and they hold them to the same standards.”
Wisner feels in some cases — like The Kroger Co.’s Simple Truth brand (delivering on a natural and organic promise) — that store brands might even be doing better than national brands at giving consumers what they want. “Somebody once characterized it as we’ve seen a switch from value to values, which I think sums it up very well,” he notes.
In the IRI report, of all the consumer households surveyed, nearly 100% said they buy private brands today. Store brands are clearly established and seeing success. The question becomes: With private brands footed on higher ground and feeling a blustery tailwind behind them, how do they maintain the momentum?