NielsenIQ details private label and economic divide at PLMA Global
As part of the PLMA Global online event, Genevieve Aronson, global head of thought leadership at NielsenIQ, discussed how retailers can navigate a ‘divided consumer landscape.’
In her presentation titled Private Label and the New Economic Divide, Aronson discussed shifting buying preferences brought on by the pandemic and changing consumer behavior, as well as the global state of private label and how to move forward.
“Consumers have landed in a very divergent economic reality,” she said. “There is a new and widening economic divide across consumer circumstances, mindsets and priorities. To stay ahead, it's important for retailers to really understand the nuances of this divide.”
In the last several months, inflationary pressures continue to hit consumers hard, impacting purchasing power. These pressures, Aronson says, are making for a very cautious society moving forward, as where and how to spend becomes increasingly important.
“Private label has historically been a safe harbor during economic downturn,” she said. “This is where we see that flight to value. Let’s keep that in mind when we speak about how to move forward."
NielsenIQ data shows that the financial polarization is ongoing, with 23% of those surveyed reporting that they have and continue to suffer financial insecurity. 21% said that they experienced income or job loss, but are back on track. 38% said that they have not been impacted financially by the pandemic and its associated cost pressures, but are cautious about spending.
“Cautious spends are setting the tone for how consumers are spending in 2022, this is very important to consider going forward,” said Aronson. “When we look at buying preferences, it's important to look at how, when and why. Affordability is front and center as a priority. However, we see an expansion of priorities…they’re prioritizing familiarity. People are going back to brands and products that have proven success and that they’re familiar with. For cautious consumers, affordability and fresh produce are priorities. With the fresh produce, it reinforces that prioritization of health and wellness.”
In regards to health and wellness trends, NielsenIQ data shows that globally, more consumers are seeking healthy options proactively. 30% of those surveyed said that if a healthier option is offered they will generally take it, and 18% said that they actively make decisions to look after their health on a regular basis. Only 6% said they generally didn’t think about health.
Aronson said that while private label brands are losing some “attitudinal connectivity,” scores are still high for quality and value. Data showed that private label demand has been tested, but still strong among countries where brand names have been historically dominant. Most American consumers said that private labels are a good alternative to name brands and are usually as good as name brands in terms of quality, but fewer consumers found that private label products are good for people on tight budgets, a sign of the economic times.
“There’s been an increase in the quality and value perceptions that consumers hold for store brands,” said Aronson. “Survey responses over the last six years through early 2021 show store brands continue to connect on value and quality, but have slipped in the past two years.”
Other factors for private label to watch in 2022 include retail consolidation in Europe, fickle loyalty of Millenials and Gen Z with the rise of eCommerce, quick innovation models and affluent individuals being a “test” audience for trial and innovation.
“We know that healthy and fresh offerings are key [for affluent individuals],” said Aronson. “We see Amazon Fresh and their announcement of plant-based private label offerings. We see that there is movement and growth there. How can you tap into that for the more affluent consumers who have interest in health and wellness and sustainability.”
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