It could very well be that national brands and private label are dancing a minuet. Each partner in the dance has a few steps and graciously gives the other an opportunity to dance. In this economy national brands and private label are trying different strategies and tactics to see what resonates with consumers. National brands have the marketing power behind them, more staff and budget, to experiment with more options. According to this report they have found a way to maintain their competitive edge and then some. Pricing is playing a more important role for both national brands and private label. Therefore, it stands to reason that revenue and profit will be examined closely for next steps among the national brands. Share is critical but national marketers answer to their stockholders who are looking for bottom line gains. Private label has always been pulling its purse strings tight. No doubt there are opportunities for both private label and national brands to catch the brass ring, i.e. loyal customers. In order to do so they have… Read more »

4 weeks is not enough time to make any assumptions on this issue. I believe that store brands will at minimum maintain the share gains they have realized over the past 18 months. If the economic recovery is slow or if it is inconsistent store brands have the opportunity for further gains. Retailers who want to build long term store brand strength can still follow a penetration and growth strategy that leads to store brand loyalty in many categories.

Consumers are applying unprecedented scrutiny on every purchase. They have traded “down” on some items and there they may stay. Does the busy family really need a higher-priced paper napkin? They may go back to a national-brand paper towel for superior absorbency and functionality.

It comes down to new value proposition based on our recent experiences. It may take a long time for consumers to forget where we are now, if they ever do.

The gains on brand share vs. private label might well be indicative of the following:

1. Brands are offering more value right now. When it comes down to it consumers still prefer to buy brands when the difference in cost is narrowed against private label.

2. Retailers are private labeling in categories where brands are important to consumers.

3. Brands are working at a faster pace to stay ahead of private label in new offerings, innovation, and line extensions.

4.Private label is not keeping pace with niche and specialty; these are growing trends.

Brand owners have learned some very important lessons about dealing with the new, more thoughtful shopper. Shoppers are investing time to understand the best value for the money, and it can have a number of different brand names depending on needs and preferences.

There has been a plateau of sorts as retailers are relaunching, revitalizing and repackaging their store brands, particulalry in the discount tiers. They are also exploring formats, channels, and moving into as well as developing new PL categories.

At the same time national brands are adding items like P&G basics, promoting and couponing, and working with retailers to feature CPG items in store. There is a renewed focus on center store, the most profitable part of the business.

There will continue to be gains for both in the shorter term as learning increases and the value of collaborative efforts for both retailers and brand owners is realized.

Private label is likely to continue to grow share of basket in small increments for two very important reasons: 1. The consumer is still seeking price / value opportunities2. Retailers find greater margin opportunities in that arena — and the retailer is “driving the bus” at this time The BIGresearch, August, 2009 Consumer Intentions & Actions Survey sought leading reasons as to why consumers shopped a particular grocer most often. When asked, “Why Do You Shop for Groceries at a particular store most often?”, Consumers were offered 24 different options. The leading reasons were: Price (76%) Location (74%) Selection (60%) Quality(48%) Fresh Produce(33%) One-Stop Shop (31%) Service(31%) Meat/Seafood(26%) Freq. Shopper Card(22%) It should be noted that 12 months ago, when asked the same question, PRICE was called out by 72% and Frequent Shopper Cards were mentioned by 19% of consumers. Brands who are working closely with retailers can hold onto shelf space. It’s very tough for non Top 3 brands in any category to hold shelf space, especially in this economy.

Not including Walmart in the study is just like the US government not including Walmart prices when calculating the CPI – a blatant misrepresentation of the market. Walmart is NOT a small inconsequential player, but the big dog that moves the game.

The most serious problem is not private label, but the fact that retailers have eroded brand power, and co-opted the brands. (Long story.) But the brand/retailer axis will undergo a massive shift in favor of the brand supplier in the coming years, as social and other internet media become commonly deployed by the shoppers themselves, inside the four walls of the store.

Until this comes, look for further growth of PL and erosion of brand supplier power.

Year over year period comparisons are a wonderful thing. Just look at what economists do with them!

Two thoughts on the trend noted. 1) It is in dollars and not units. 2) Wait for at least a 12 week confirmation before making any conclusions.

This is not Grenada. More like Afghanistan.

00.2% is indeed a minor share gain. If this were reported like political polls, one would add a degree of error of +/- X% that would certainly be greater than 00.2%. Without including Wal-Mart, a 00.2% gain is meaningless.

What is considerably more meaningful is the BIGresearch Consumer Intentions & Actions Survey referenced above indicating that there is a large and growing decision making process based on price. And what is notable and surprising is the previous year’s study indicating that “Quality” ranked less than 50%.

Given today’s data, there is no indication that the private label growth trend is coming to an end. As more and more retailers market (the Four P’s) their private labels like brands, private label will continue to grow.

This is not a significant measure from which to make any definitive conclusions. PL is growing, and national brands see this happening globally. The US doesn’t have nearly the PL penetration that other countries have, especially in Europe. The trend will only continue to grow here and national brands need to respond. Take a look at the latest PL news here: http://www.plma.com/escanner/September2009b.html

Well, has anyone taken the promotion/discount spending of National Brands into consideration? Facing facts, PL is a substitute for National Brands only as long as the value proposition is in place. At some point there is a price at which National Brands regain consumer preference. This should be easy for the National Brands to manipulate as all took price increases based on oil prices and never gave any back when the price dropped.

Looking at share numbers doesn’t come anywhere close to telling the whole story. I believe that with the improvement in PL quality, PL will continue to grow as long as National Brand pricing stays somewhere near the traditional suggested retail price. However, dropping National Brand pricing to PL pricing levels will always shift share.

The private label (now Retailer Brands) retailers should use their stores to advertise where and when buyers make their purchase decisions. Most of our clients have found this very effective and at low cost. But there must be superb creative and guaranteed 95%+ installation to be effective.