PL Buyer: Correcting Some False Assumptions About Today's Shopper
Through a special arrangement, what follows is a summary of a current article from Private Label Buyer, presented here for discussion.
While many people have discussed a "new consumer" emerging from the downturn, Brian Sharoff, president of the Private Label Manufacturers Association, believes only about 25 percent have become more frugal or are experimenting more with store brands to save money.
"The vast majority of consumers, some perhaps struggling more than others, will continue to do what they've always done but attempt to make adjustments based upon the economy," said Mr. Sharoff.
Indeed, with over 65 percent of consumers now saying they buy private label frequently, shoppers are looking for private label for a variety of reasons beyond price.
"In some cases, they have decided what they are paying for is no different at $3 a box than $5 a box," said Mr. Sharoff. [But] there are other categories where the consumer does believe that price indicates quality. The thing they buy is their perception. Everyone knows that if you go to a Trader Joe's or a Whole Foods or a Kroger, their own brands are as good as the national brands."
But even if the 'new consumer' only represents 25 percent of shoppers, their changing buying patterns are boosting private label expansion and will likely continue to in the near future.
"I thinks it's obvious that the recession is not going to be completely over, and there will still be the impact of the recession on the psychology of the consumer," said Mr. Sharoff. "While it's bad news for consumers, it's great news for private label growth."
He said the decision to buy private label often comes as consumers become dissatisfied with one of the products they regularly buy before and start looking for an alternative at the store.
"Private label comes into play when the consumer has to suddenly change a decision. At that point the question of private label packaging, private label quality, comes into effect," said Mr. Sharoff. "A retailer that has chosen to assign boring packaging to its products and to assign below grade quality to its ingredients runs the risk of not making a private label sale."
And once they try a private label product, the quality has to be there for repeat purchase.
Said Mr. Sharoff, "If the quality is high and meets the expectation of the consumer, then consumers will continue to buy the product. If the quality misses the mark, then one should not be surprised if consumers are disappointed in the quality and do not buy the product. The good news is that concept of quality first has taken hold and the private label trend is definitely on the upswing."
Discussion Questions: How do you think the downturn has changed consumers' perceptions around buying private label products? What will be most important for store brands to hold onto their market share gains or continue to expand as the economy improves?