Multicultural consumers spend less on store brands

According to Nielsen, a New York-based provider of information and insights into what consumers watch and buy, more than two-thirds of total U.S. households (70 percent) agree that store brands are a good alternative to name brand products. However, growth patterns reversed in 2015 and into 2016, resulting in flat to slightly declining private brand share.

According to Nielsen's Homescan data, private brands have a lower share among the top multicultural segments that are driving non-white population growth in the United States. These groups — Hispanics, Asian-Americans and African-Americans — spend more money on branded items and relatively less money on store brands. In particular, while annual branded and store brand buying rates among Asian-American and African-American households are lower than total white non-Hispanic households, they’re especially low for store brands, where African-Americans households spend 18 percent less annually and Asian-American households spend 22 percent less annually.

Not only are multicultural consumers less likely to buy private label, they’re also more likely to have negative perceptions toward these products, Nielsen said. These population segments are more likely to call out poor store brand packaging, question quality and believe that store brands are only for people on tight household budgets. These negative perceptions likely influence multicultural consumers’ purchase behavior and might contribute to private label’s recent share decline. 

With the diverse population in the United States quickly growing, retailers and manufacturers might need to take a closer look at how they are marketing store brands to once again grow private label share. Without the critical component of effective in-store, out-of-store and online marketing, multicultural shoppers might bypass private label altogether if it does not reach them in a way that leaves a connected and lasting impression, Nielsen said.

In an effort to reach a cross-section of multicultural shoppers beyond marketing, retailers and manufacturers could also identify areas on which to focus by looking at the top-selling private label categories across all population segments. For example, fresh vegetables and herbs, eggs, water, fresh meat, bath tissue, nuts, household plastics, fresh desserts, disposable dishes and coffee have had significant gains in absolute private label dollar sales during the last four years. Whether or not these categories are important to multicultural households would be up to retailers and manufacturers to research, Nielsen said.