Private label (PL) products have finally shaken their inferior image. A recent report by Information Resources Inc. titled, “Private Label 2009: Understanding and Mitigating Private Label Threat,” revealed that 78% of both lower and higher income shoppers believe private label products are of excellent quality. The information in the report was gathered from 1,500 consumers.
With the nation’s continued focus on economics, it surprised me to learn price is not the most significant driver in PL purchases, as variety, packaging and quality are even more important to consumers. Brent Baarda, director of IRI Consulting & Innovation, in an interview with this magazine, states, “What makes the products appeal to consumers is that they recognize that the quality is often as good or better than the national brand, and that the product fills their demand for value (i.e., lower price, same quality). Consumers are having mostly positive experiences with private label, which builds loyalty to the brands and encourages trial in new categories (i.e., shopper likes Jewel brand cereal, so [she] will be willing to try their frozen pizza).”
During the first half of 2009, private brand unit share increased in 13 of 15 of the report’s categories, and the strongest were natural cheese, butter and canned vegetables; peanut butter, cookies and pet supplies are also growing. PL products were weakest in frozen breakfast foods, vitamins and shelf-stable dinners, according to IRI.
The recession has had a positive impact on private brands, with more families experimenting to save money. The report showed that nearly two-thirds of shoppers often buy PL items, as opposed to name brands. The private label also has become a lure for certain stores, as 65% of shoppers said they prefer stores that have a lot of private brand variety, up five points since 2007. When asked to expound on the factors contributing to the expansion of private brands, Baarda replies, “Retailers consider these to be ‘their own’ brand. They are more popular, because retailers have focused resources on improving the quality, expanding assortment and being more aggressive about marketing these products to their shoppers.”
Because more is now at stake with their own labels, retailers have upped quality, and uniformity is key to fulfilling consumer expectations of what a product should taste like. “For private label food manufacturers, their role is to make consistent quality, with quality packaging in a way that supports the retailer’s objective for the brand. The quality has to be there, first and foremost. No amount of retailer promotion and marketing will work, if people have bad experiences,” concludes Baarda.pf