Private brands are having a ‘destination effect’ on where consumers shop

Part three of the FMI study found that 46% of consumers say store brands influence their store of choice, up nine points from three years ago.

According to new research from the Food Marketing Institute (FMI) and its analytics partner IRI, a retailer’s private brand selection is increasingly having more impact on what store a consumer chooses to shop.

FMI released a three-part study on private brands, looking at how private brands are doing in sales, how they’re marketing private labels, and lastly how consumers respond to them. In part three, FMI reported that 46% of consumers say store brands influence the store they shop, up from 35% of consumers feeling this way when reported three years ago.

“The solid growth of private brands reflects the success of retailers treating private brands as brands, rather than just following the lead of national and legacy brands," said Doug Baker, FMI's vice president of industry relations. "The proof is in consumer satisfaction; shoppers surveyed shared most that they trust the quality of private brands and believe they get a good value. Still, our research indicates that challenges remain for private brands’ image, such as its packaging.”

The study noted that most gains among private label brands are happening outside of grocery, but across channels, private brands outpaced national brands in sales growth for the second year in a row, up 5.4%.

In 2018, private brands both edible and non-edible earned $153 billion in U.S. sales, according to IRI, the data provider for FMI and its FMI Private Brands Leadership Council.

The three-part study available from FMI breaks down as such:

  • Power of Private Brands: From the Register. Featuring insights on consumer spending on private brands, the study found considerable gains among private brands over a three-year period.
  • Power of Private Brands: From the Industry. Eyeing promotional tactics, the second part noticed an increase in Instagram usage from retailers to highlight store brands.
  • Power of Private Brands: From the Consumer. Analyzing consumer behaviors and attitudes toward private brands, the report found store brands can have a “destination effect” on shoppers choosing stores based on store brand selection.