Why millennials matter (even though you’re tired of hearing about them)

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Why millennials matter (even though you’re tired of hearing about them)

By Lawrence Aylward - 04/11/2018
Millennials are a discerning bunch.

Warning: The following is another commentary about millennials and private brands. I know a lot of people — including millennials themselves — are tired of hearing about millennials and private brands. For the record, I’m tried of hearing (and writing) about them.

But as Don Stuart said during a seminar a few weeks ago at the Private Label Manufacturer Association’s Annual Meeting & Leadership Conference in Bonita Springs, Fla., millennials will play a pivotal role in the “boom or bust” of private brands in coming years. They can’t be ignored when it comes to the future of store brands.

Stuart, managing partner of Wilton, Conn.-based Cadent Consulting Group, believes private brands are sitting on the cusp of a major boom. So do a lot of people. In fact, when Stuart asked the 200 or attendees of his seminar to raise their hands if they thought store brands would be booming in the next five years, almost all hands went up. Zero hands were raised when Stuart asked who thought private brands would be a bust.

Stuart and his firm have been studying private brands closely and crunching numbers along the way. While many reports say that most millennials are open to purchasing private brands and are brand agnostic, “most” in this case is not 90 percent. It’s more like 51 percent, according to Stuart.

So, it’s more like half of millennials are open to purchasing private brands, which is not most. But that number is still significant, considering that only 39 percent of baby boomers are open to purchasing private brands, according to Cadent Consulting Group’s research.

“That’s 12 percent, which makes a difference in the share shifts,” Stuart stressed.

Stuart also noted that there will be 15 million more millennials than baby boomers in the next 10 years simply because baby boomers will be leaving this world. So the the share shift factor that Stuart talks about looms even larger. The more millennials, the more chance there is that they will purchase private brands. The fewer baby boomers, the less chance that they will purchase national brands. So you can see where Stuart is coming from.

“All of the sudden there are those coin flips that could go store brands’ way because branded products don’t mean as much,” Stuart says.

The perimeter of the store is also another factor. Retailers realize they must grow the store perimeter with more fresh private-branded offerings because the center store is shrinking and that space must be accounted for. Guess what? Millennials love fresh products.

Another score for private brands.

There are other factors, including the Amazon/Whole Foods Market factor, the Aldi/Lidl factor (both of those retailers are growing and both offer about a 90 percent assortment of private brands) and the growth of online ordering which will benefit the boom of private brands, Stuart says. But millennials will play a key role and, therefore, we just can’t stop talking about them anytime soon.

Of course, retailers and manufacturers will have to continue to figure out what millennials want in terms of food and non-food items, which seems to be a moving target. But it’s clear that millennials prefer organic and free-from products, which is where retailers and manufacturers are already putting a lot of focus.

Stuart predicts that private brands could grow eight share points in the next 10 years, “which is an incredible rate from where we have been,” he notes.

But there is one thing that could deflate the bust, Stuart adds.

“Trust,” he says. “Trust really matters.”

If products don’t taste good or lack quality, if products aren’t delivered on time, if customer service is lousy … then trust erodes.

“If you lose trust, it takes a long time to earn it back,” Stuart says.

With millennials, a discerning and demanding bunch, retailers and manufacturers have their work cut out for them when it comes to trust and the future success of private brands.

 

 

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