Shopper demand for—and purchases of—private brands has never been higher as demonstrated by findings from the recent IGA private brand study—and corresponding white paper report—conducted in conjunction with Willard Bishop that highlights how retailers can better take advantage of this trend, drive sales of private brands, and meet/exceed shopper expectations.
The Time is Right for Private Brand Growth
According to PLMA (Private Label Manufacturers Association), private brand items account for 24% of unit sales and 19% of dollar sales in U.S. supermarkets, both all-time highs. While there are several drivers of the general increase in shopper demand for private brands across the grocery industry, three of the most important include:
- The Economy – The challenging economy combined with high food price inflation is encouraging shoppers to look for ways to stretch their grocery budgets and private brands provide such money-saving options. And, it’s a good bet that shoppers will not revert all the way back to their old free-spending ways when the economy improves.
- Quality – The quality of private brand products continues to improve and is now typically as good as that offered by national brands. Shoppers are finding that they can trade to private brands without sacrificing quality.
- Marketing – Retailers are becoming strong marketers of their stores and unique product offerings. They’re actively positioning their private brand programs as an important component of their value offerings, i.e., providing a key way for consumers to be smart shoppers and save money in their stores.
Retailers have a great opportunity to strengthen shopper appeal, encourage more intensive shopping and increase profitable sales by enhancing the breadth of their private brand programs and effectively highlighting the availability of private brands throughout the store. The 2011 IGA private brand study demonstrates the importance of private brands to today’s shoppers and how retailers can take full advantage of the private brand opportunity.
The IGA Study
The study assessed shopper perceptions, preferences, and behavior relative to private brands and identified how independent retailers can successfully satisfy shopper demand for private brands. Information, insight, and best practices were captured from:
- Focus groups and one-on-one interviews with IGA shoppers.
- Interviews with IGA retailers and wholesalers.
- Best practices from retailers outside the IGA family.
Shopper Demand for Private Brands
In today’s challenging economy, shoppers are looking to stretch their grocery budgets while taking great care of their families and view private brands as a trusted way to help them do so. During the study, we talked to IGA shoppers across the country and learned that they:
- Are actively searching for price and value – Eight out of ten shoppers are more focused on price and value than they were a couple of years ago. The economy has fundamentally changed the way they shop.
- Are purchasing more store brands – 62% of shoppers are buying more store brands than they did a couple of years ago from all stores they shop. The key is to ensure they can do so in your stores.
- Trust private brands – 88% of IGA shoppers have a high level of trust in IGA private brand products; they view them as at least the same quality as national brands.
- Want more private brand products available – The majority of shoppers are looking for even more private brand products than they find today. They recognize the value these items offer and want to see them more widely available across the store.
What better way to satisfy shoppers and retain more of their spending than by giving them exactly what they want, i.e., more private brand products? Are you carrying as many private brand products as you can? This is the perfect time to expand assortment of these value-oriented items and effectively highlight them in the store so that shoppers know they’re there and can find them easily.
A great way to jump start your private brand program is to review the information and best practices contained in the study: The Power of Private Brands. A copy of the IGA private brand white paper can be obtained directly from IGA at http://www.iga.com/igabrandcorp.aspx.
About the author
Jon Hauptman is a partner at Willard Bishop LLC—a supermarket industry consultancy—and runs the firm’s retail services practice.
Jon is widely known as one of the industry’s leading retail pricing experts and his insights are regularly featured in major market newspapers and national publications including The Wall Street Journal and USA Today,
Jon has also appeared as a guest on National Public Radio’s Morning Edition.