In the December issue of CPGMatters the article by Lynne Cooke, “Growth of Store Brands Changes the Marketplace Dynamics,” explores the growing popularity of private label items across various categories, and how this may raise concerns for makers of national brands.
The Private Label Manufacturers Association (PLMA) has reported a significant increase in total U.S. store brand dollar sales, reaching $233 billion, up by $4 billion from 2022. This surge is attributed to consumers turning to attractively-priced private label goods amid rising costs of name brands due to persistent inflation.
Our recent AMC Global consumer behavior study supports this claim, showing that 22% of shoppers have switched to store brands to save money in the face of inflation.
In the article, Cooke shares that retail and brand analyst James Tenser emphasizes the need for national brand manufacturers to pay attention to the growing strength of private labels. The market is shifting, creating space for store brands to move up in the value equation. Further, the quality and innovation of private label products is improving along with the increasing number of consumers trying them during periods of supply disruption or price hikes in today’s economy.
“Growth of Store Brands Changes the Marketplace Dynamics” suggests that if brands detect a loss of category share to private labels, they might resort to more aggressive promotions. Our ongoing study shows that, in the face of continued inflation, 28% of shoppers are buying CPG products that are on sale or with a coupon to help save money on their shopping costs. The article in CPGMatters also suggests that some packaged products could increase pack sizes to claim better value for the money—and this could be a good strategy. Thirteen percent (13%) of respondents in our study report buying in bulk in the face of inflationary costs.
Store brand programs at major retailers are described as broad, expanding, and highly competitive in quality in this piece from CPGMatters. The evolving dynamics between retailers and brand marketers in the face of the rising popularity of private labels is an important space to fully understand the trends and predictions. Brand Health Tracking research is critical for brands to detect threats from private label brands and to understand brand differentiators which make name brands worth paying more for. Choice Modeling/Conjoint Research can also help brands to understand how price promotion will impact their share of choice at shelf. Reach out to us to learn more!
