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Are grocers under-marketing their store brands?

Written by Tom Ryan

Source: Kroger.com

While grocers have earned credit for upgrading the quality and branding of their private labels, a new study finds store brands receive little marketing support. Among the findings from a survey of 117 U.S. grocers taken in the fourth quarter from Incisiv and Wynshop’s Grocery Doppio platform in partnership with FMI:
  • Ninety-seven percent are currently using marketing emails for national brands versus only 32 percent for private brands;
  • Ninety-five percent are using banner advertisements on internal channels for national brands compared to only 16 percent for store brands;
  • Ninety-one percent are using internal web or app search results for national brands versus 41 percent for store brands; 
  • Fifty-seven percent use in-store promotion screens for national brands versus only two percent for store brands.
Private label pushes may face conflicts with national brand partners. The study stated, “Grocers are in the difficult position of building their private brands to compete with the national brands while continuing to foster a mutually beneficial relationship with their trade partners.” Eighty-three percent of grocers surveyed also felt they needed more dedicated marketing resources to realize private brand successfully. The top private brand challenges cited included limited in-house resources, inadequate budgets, lack of IT resources and skills, and lack of relevant content to personalize. The study comes as reports indicate shoppers are trading down to store brands amid inflationary pressures. FMI’s second installment of its “Power of Private Brands” study, which came out last September, found more than 80 percent of food retailers and manufacturers expect to increase investments in private brands over the next two years. Based on retailers’ stated goals, the average dollar share of private brands is expected to jump from 18.2 percent to 22.6 percent within two years. Online, private label growth drivers cited in FMI’s study included prioritizing store brands in search results, upgrading product images, tagging attributes such as health and sustainability in search, and cross-selling/upselling in search. At the store level, potential private brand growth's drivers included endcaps and eye-level displays, cross-merchandising, better signage and sampling.

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