Shoppers continue to leave national brands behind

America’s national food, beverage and household brands struggle to regain favor in the hearts and minds of U.S. consumers for the fifth year in a row, according to Deloitte’s annual "American Pantry Study" of more than 354 brands across 34 product categories.

Almost three in four (73 percent) consumer packaged goods (CPG) categories show an overall decline in their brands’ “must-have” status, meaning that shoppers would purchase them whether they were on sale or not, New York-based Deloitte said. However, this year’s study also showed a drop in store brands’ appeal, improved consumer perceptions of the economy and shoppers’ willingness to pay a premium for attributes such as health and convenience — which might signal a turning point that is set to further disrupt the CPG industry after years of consumer caution.

“This is a critical moment for consumer product companies,” said Barb Renner, vice chairman, Deloitte LLP and U.S. consumer products leader. “While the majority of consumers say they are committed to sustained frugality year after year, our findings point to early signs that they may finally be responding to a belated but increasingly strong economic recovery.

"It creates tremendous opportunities and risks for companies in this sector," she added, "given households’ lack of commitment to national brands brought on by years of stretching dollars to the limit. Brands that get things right can use the economy’s momentum to regain their place on consumers’ shelves, but those that move too slowly could very well be left behind.”

While previous years of economic stagnation fueled consumers’ interest in store brands, this year’s study revealed that trend may be reversing as recession-weary consumers loosen their purse strings, the company said. The number of consumers who view store brands as a sacrifice (43 percent) jumped 10 percentage points from last year's study, while fewer consumers (65 percent) indicate they are more open to trying store brand products, an 8 percentage point decline.

Moreover, roughly one-quarter (25 percent) of consumers indicate they are willing to pay a premium of 10 percent or more for a product that is new or innovative, and one-third (33 percent) will do so for a craft version of food or beverages, Deloitte said.

According to the study, more than half (55 percent) of consumers turn to digital tools to research products, up from 45 percent last year and ahead of the number who do so to compare prices (48 percent), which remained flat compared with last year. Additionally, four in 10 (37 percent) use devices to make shopping lists or meal plans. These behaviors signal multiple points to interact with people along the path to purchase outside of traditional discounts, from building today’s list to planning next week’s dinner.

When it comes to online orders and delivery, a noticeable gap exists between consumers’ interest levels and current activity. For example, 38 percent of consumers are interested in online grocery orders for in-store pick up, but only 11 percent already use this service, Deloitte noted. Similarly, 27 percent are interested in home delivery orders placed online for recurring purchases, but only 11 percent already use such a service. The study suggests there may be a shortage of services consumers seek, creating significant unmet demand that CPG companies can pursue for growth. 

For more information about the 2015 American Pantry Study, including in-depth survey findings, visit http://www.deloitte.com/us/AmericanPantry15.