Q&A: Which Name Brand Consumers Are Buying Private Brands?
As inflation continues, many shoppers who traditionally purchase name brand products are giving private label brands a look.
Citing the NielsenIQ Global SMB Report, which can be found here, Andrew Criezis, Senior Vice President and General Manager of NielsenIQ SMB, spoke with Store Brands about the current state of private label among name brand shoppers.
What are the best lessons that retailers can take away from the SMB report?
It’s interesting, because if you’re a powerful mass retailer or a larger supermarket with a strong private brand portfolio, you may not think a report on small- and medium-sized businesses could tell you much, but there is a lot that can be learned, particularly in how consumers perceive large and small brands.
Retailers can take away from the 2022 Brand Balancing Act report a deeper understanding of consumer motivations for small brands vs. large brands, what they expect these brands to stand for, where they fall short, and retailers can then build store brand strategies to better compete against both large and small brands.
But as far as a standout learning regarding private label from the report, interestingly, our global survey of consumers found that those who considered themselves to be Exclusive Small Brand Buyers, nearly two in 10 will opt for a store brand product when looking to save money. This was unique to that shopper base.
The study surveyed global shoppers as a whole, but it also looked at learnings from these shoppers grouped into four behaviors: Agnostic Buyers (shoppers not swayed by brand), Unintentional Small Brand Buyers (shoppers who buy small when convenient), Exclusive Large Brand Buyers, and Exclusive Small Brand Buyers.
In total, a fourth of shoppers are looking online for the best deal possible to save money and monitoring the cost of their overall basket of goods to save money. Exclusive Large Brand Buyers stood out in that 27% are buying larger or economy sizes to save money.
Why do small brand buyers opt for private brands more than large brand buyers?
There are a couple ways to think about that insight learned in the report. On one level, shoppers who only want to buy small brands, who identify with those brands as being independent, of better quality and generally better for the earth, if they can’t get it, they’re going to buy an own brand for its value. They may be in the headspace, if they can’t get the small brand they want, they’re going to buy a store brand because it tends to be more affordable.
A small brand buyer may also just be firm against buying large brands due to how they identify with a small brand. Interestingly, the study found that 47% of Exclusive Small Brand Buyers are less likely to continue buying a small brand once they’re picked up by a larger brand.
So, in that vein, the small brand buyer may trust the retailer where they’re shopping in the same way that they trust a small brand. If they can’t get the brand they generally buy, they’ll look to the store brand and it becomes an opportunity for that store brand to earn a brand-switch by delivering on what Exclusive Small Brand Buyers said they look for in a small brand.
For example, the report found small brands stand out because they’re perceived to be unique, local, and deliver on specific dietary health needs and environmental benefits. If the retailer’s private brand option is less expensive and delivers against those attributes, they could grow their business.
Is affordability the main driver of private brand growth?
Affordability is the main driver of any purchase. Of all the global consumers surveyed, 93% said a brand’s affordability (or an ability to provide good value for the money) is most important when it comes to brand choice. I think what’s interesting in that response, is that it’s not just saying, lowest price wins. It’s value for the money.
For example, 49% of the Unintentional Small Brand Buyers surveyed said small brands are usually more expensive, but they’re prepared to pay a bit more. And only 20% of those shoppers said they buy the lowest price option.
If a store brand delivers a level of quality, local flavor, and eco-friendly value on top of affordability, that’s additional value to a shopper.
Do you predict private label success increasing in the coming months as inflation is expected to continue?
It’s commonly thought that during tougher economic times, shoppers will look to save money buying store brand products. NielsenIQ data has seen private label share in categories like milk, frozen seafood, and bottled water consistently increase over the last three years, so retailers could certainly grow store brand sales during an extended inflationary period.
However, unlike previous periods of inflation, the acceleration of e-commerce and omnichannel shopping behaviors change things up, putting pressure on to have products available and ready to ship or be prepped for curbside pickup. The explosion of e-commerce is also enabling new brands to gain a larger following as they are equally searchable online from an attribute standpoint. This will put pressure on private label and incumbent brands as their command of fixed shelf in brick in mortar is not the same online.
And like the 2022 Brand Balancing Act report highlights, too, there are global consumers that place a high importance on products being better for them, meeting their dietary needs, as well as better for the planet, achieving sustainability goals. I don’t think a retailer’s store brand or any brand will succeed if they only think about low price.
Even shoppers hit during a tough time seek innovation and some enjoyment from their products. They’re just being wiser about how they fill out their baskets, where they get the best price, and the best long-term or short-term fit in terms of pack size.