Movin' On Up

Despite improvements in the economy, this year brings more "Movers and Shakers" — store brand food and non-food categories that posted dollar and unit sales increases of 5 percent or more and reached $5 million or more in sales — than last year. In fact, 60 food categories and 38 non-food categories accomplished this feat during the 52 weeks ending June 9 (U.S. food, drug and mass merchandiser stores, including Walmart, based on data from New York-based Nielsen).*

Perhaps even more impressive is the fact that 34 of the food categories and 21 of the non-food categories saw double-digit dollar and unit sales increases during this timeframe. In general, the drivers behind the rises include overall category growth, new product introductions and price increases that result in a "mix shift" from the national brands to store brands for many shoppers, notes Jim Hertel, a managing partner with Willard Bishop, Barrington, Ill.

Convenience rules in foods

Making a strong showing on the foods Movers and Shakers list are a wide array of snack and convenience-minded meal items, including frozen seafood entrées (+40.2 percent in dollar sales and +23.3 percent in unit sales), shelf-stable dips (+37.6 percent and +28.1 percent), frozen hors d'oeuvres/ snacks (+31.9 percent and +16.4 percent), deli sandwich spreads (+17.8 percent and +13.1 percent), frozen breakfasts (+16.4 percent and +14.0 percent), potato chips (+16.3 percent and +9.3 percent), frozen Mexican entrées (+13.3 percent and +25.3 percent), refrigerated snacks (+13.2 percent and +7.8 percent), pretzels (+11.2 percent and +5.3 percent), caramel corn/popped popcorn (+10.4 percent and +14.7 percent), deli sandwiches (+9.5 percent and +11.5 percent), frozen potatoes (+7.9 percent and +6.9 percent), "remaining" frozen prepared foods (+6.7 percent and +5.3 percent), frozen meat entrées (+6.0 percent and +10.3 percent) and more.

Carol Spieckerman, president of newmarketbuilders, also noticed the prominence of convenience foods and snacks.

"Not only does this validate consumers' ongoing preference for convenient meal solutions, but it attests to the great job that retailers have done going head to head with national brands in these categories," she says. "In combination, many of the hot items point to consumers' cutting corners, not just by choosing private brands in the first place, but also by purchasing lunch preparation items, perhaps in lieu of going out to lunch."

Also making an impressive showing are a slew of baking staples, suggesting that home baking — even if not completely from scratch — still has a strong following even in today's convenience-driven environment. Movers and Shakers here include cake decorations and icing (+63.2 percent and +25.9 percent), canned pumpkin (+27.3 percent and +19.5 percent), white and wheat all-purpose flour (+23.3 percent and +9.6 percent), cello-wrapped nuts (+19.8 percent and +10.8 percent), layer cake mix (+17.6 percent and +9.3 percent), dry seasonings (+14.9 percent and +5.1 percent), brownie mixes (+14.7 percent and +6.8 percent) and coconut (+11.5 percent and +7.8 percent).

Hertel says his firm is broadly seeing increased retailer focus on private label grocery products.

"As their center-volume declines but the space remains, grocers are trimming back on national brands' space and increasing own-brand space, often with new variety and new packaging," he says. "They see an opportunity to differentiate with private label, increase their store brand awareness, blend to a greater margin rate, improve price image and reduce their overall inventory investment as a result."

A combination of these factors likely is behind this year's food numbers, Hertel believes.

"I'd point out that the big categories that are growing include private label water, a category that has been growing for years, and bacon, which has exhibited a lot of price volatility over the last few years of food inflation," he adds.

Another driver in the food segment is inflationary pressure from rising commodity prices, says Todd Hale, senior vice president, consumer and shopper insights, for New York-based Nielsen.

"Look how dollar sales growth was stronger than unit sales growth in every category," he stresses.

Consumers seek do-it-yourself solutions

As for the non-food Movers and Shakers list, both Hertel and Spieckerman believe it reflects consumers' willingness to find do-it-yourself solutions.

"One large and fast-growing category is motor oil, which grew over 24 percent in dollars and over 10 percent in units," Hertel points out. Clearly, there's inflation at work, but I believe there is also growth in do-it-yourself auto maintenance given the sluggish economy, stagnant incomes and persistent unemployment."

But the do-it-yourself trend evident in the table isn't limited to auto maintenance — Spieckerman also sees it on the personal care and household care fronts.

"The growth in cosmetics and nail care is fascinating, considering how many retailers are aggressively going after these categories through exclusive brand deals," she says.

"Evidently, consumers are willing to consider private brand alternatives. It's an interesting irony that tobacco accessories topped the list and that smoking cessation solutions were at the bottom, yet still on the list," she adds.

Outside the categories Hertel and Spieckerman mention, other Movers and Shakers that trend toward do-it-yourself include motor vehicle cleaner and protection (+107.3 percent and +113.9 percent), oven cleaners (+27.5 percent and +7.4 percent), diet aids/complete nutritional (+21.3 percent and +23.6 percent), engine treatment and additive (+18.0 percent and +12.3 percent), scouring pads (+15.3 percent and +13.8 percent), household sponges and cloths (+14.7 percent and +5.5 percent) and many more.

Although inflationary pressures are evident in a number of non-food categories, too, they have less impact here overall than on the food side, Hale notes. That reality suggests more-innovative efforts on the part of retailers when it comes to new products.

Room for improvement

Thanks in part to this year's Movers and Shakers, private label dollar share overall increased by 0.4 points to reach a 17.2 share. But despite the dollar sales gains, store brands have made only minute gains in terms of unit share in recent years, Hale says, and saw only a 0.2 point increase during this 52-week timeframe.

"Private label unit [share has] been stuck at the 21 share level for the past three and one-half years," he notes. "While some retailers continue to perform very well in this space, others have not, and brands have done a better job of innovating and connecting with consumer solutions around health and wellness, aging population, convenient consumer solutions, and multicultural consumers."

Going forward, retailers likely will need to manage yet another round of inflationary pressures related to this summer's drought conditions in many areas of the country. Hale says.

"While more retailers are marketing their private label like brands these days, are they putting the same kind of 'brand-level' research behind their introduction?" he asks. "Long-term, private label retailers need to connect with more diverse consumers, and we need to see more real innovation and less 'me-too' innovation."

Retailers also would be wise to consider the 'warming trend' across the country, weighting products in their brand portfolios accordingly, Spieckerman believes.

"Increasingly, traditional seasonal assumptions and patterns will be trumped by weather-based 'wear now,' 'eat now' [and] 'use now' realities," she said.