Are store brands set for a big growth spurt?
National brands saw outsized growth in the first quarter as consumers stocked up in the initial stages of the coronavirus pandemic, but store brands expanded even faster.
According to data provided to the Private Label Manufacturers Association (PLMA) by Nielsen, first-quarter sales of store brands in U.S. retail outlets jumped 14.6 percent year-over-year, ahead of the impressive 11.5 percent gain for national brands.
Among channels, store brands gained 16.6 percent at mass (mass merchandisers, club and dollar stores), 12.7 percent at supermarkets, and 13 percent at drug stores, versus 10.1 percent, 15 percent and 7 percent for national brands, respectively.
“There’s no doubt that shopper behavior was highly influenced by consumer fears,” said Brian Sharoff, PLMA president. “Nonetheless the statistics point to greater acceptance of retailer brands as the coronavirus crisis evolves.”
Catalina Marketing, as reported by CPGmatters, saw the gravitation towards private label purchases continue in April.
A survey of 2,000 shoppers by research consultancy Magid taken in two stages — the beginning of April and the start of May — found the top reason consumers tried a private label product, cited by nearly half, was because their preferred brand was out of stock, followed by the desire to save money, 35 percent.
Sixty percent that made a switch said that they are “likely to continue buying private label brands.”
Store brand growth in recent years has been attributed to improvements in the development and promotion of labels, including quality upgrades, expanded price tiers and extensions across categories. Stores have been using private labels for differentiation, negotiating leverage with national brands and enhancing margins. Consumers have also become less biased when it comes to purchasing retailer-owned labels.
Private label sales grew during the Great Recession as consumers traded down to less expensive and store brand options and that’s expected to happen again.
A Wall Street Journal article on the potential for store brands to achieve market share gains stated, “In the previously unloved food business, grocers and brand owners such as Kraft Heinz Co. are more obvious beneficiaries of the coronavirus crisis. As recession bites, though, private label companies will likely take a bigger share of the spoils.”
- Nielsen first quarter numbers show growth of store brands as shoppers stock up during crisis – Private Label Manufacturers Association
- Shopper survey: 60 percent of consumers likely to continue buying store brands after COVID-19 – Store Brands
- Sales of Store Brands Increase as Shoppers Stock Up during the Crisis – CPGmatters
- Pandemic Fuels Wine Sales At Grocery & Convenience Stores Per Latest Shopping Data Shared By Catalina And Koupon – Catalina
- Store Brands Eye a Bigger Share of the Dinner Plate – The Wall Street Journal
- Amazon, Costco have ‘most favorable’ COVID-19 response, shoppers say – Supermarket News
- Private Label: Don’t Fight It, Thrive In It – Accenture
DISCUSSION QUESTIONS: Do you see more factors driving rather than holding back private label growth in the CPG space over the next several years? Will the expected economic downtown due to the pandemic influence store brand purchases any differently than past downturns?