In the wake of the recession that hit the US economy hard and plagued consumer spending, private labels staked their claim in the consumer packaged goods (CPG) space. Also known as store brands, private-label share of retail sales grew from 16.2% to 17.4% between 2009 and 2011, with year-over-year sales growth outpacing brands by a significant margin.
But the US economy has since been on the upswing, and consumers are looking beyond price. According to a recent Nielsen report on the global retail landscape, consumers called out the importance of quality, availability and convenience as key factors driving their purchase decisions. So while private label growth was comparable but slightly greater than that of brands since 2012, growth patterns reversed in 2015 and into 2016, resulting in flat to slightly declining private brand share.
Still, Nielsen research continues to illustrate high consumer interest in store brands. More than two-thirds of total US households (70%) agree that store brands are a good alternative to name brand products. Nearly a decade after the recession, private-label products can be found in virtually all US households. So what’s behind this trend of private and branded products leveling out and private shares slipping? Are brands out-promoting private label? Or with an improved economy, are fewer households turning to private label products in an effort to save money? What other factors are at play?
Through Nielsen Homescan data, it’s apparent that private brands have lower share among the top multicultural segments that are driving non-white population growth in the US. These groups—Hispanics, Asian-Americans and African-Americans—spend more on branded items and relatively less on store brands. In particular, while annual branded and store brand buying rates among Asian and African-American households are lower than total white non-Hispanic households, they’re especially low for store brands, where African-Americans households spend 18% less annually and Asian-American households spend 22% less.
Private Label Brands in Multi-cultural Households
Private brands have lower share among the top multicultural segments that are driving non-white population growth in the US
August 11, 2016