Store Brands Market Share Gains Level, But Likely to Hold

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April 13, 2010

The two-point market share gain by store brands since 2007 is leveling off, primarily due to CPG discounting, and some industry players predict they will have a very difficult time regaining lost ground, according to an Ad Age report.

Store brands gained 1.1 share points last year –– the biggest one-year increase in 10 years –– and more than 2 points since late 2007, according to Nielsen data analysis from Sanford C. Bernstein & Co. Store brand incursion has been particularly successful in the household and personal care categories have been, which have grown faster than food.

Store brand market share, however, has been nearly flat since September and are down 0.3 percentage points from October, according to the report.

“That's the good news for brand marketers. The bad news is, so far, they're largely staving off private label by reducing price gaps. That comes from a combination of the brand marketers cutting prices and private labels raising them as they catch up with hikes the branded players took a year or more ago,” according to reports by Bernstein and Consumer Edge.

CPGs that lost share to store brands will have difficulty winning back those sales, according to Bernstein and Consumer Edge. After past recession, national brands have only been able to recoup 30 to 40 percent of the share lost to store brands.

Bernstein analyst Ali Dibadj said it could be even harder to regain sales after this recession because consumer are finding the lower-cost products as good or better than CPG brands. "Consumers will] need either a decrease in price [of the branded products] or a new product or improvement in quality."

CPG price-cutting has never been that effective in regaining share, according to Sean Seitzinger, senior-VP consulting and innovation at SymphonyIRI. “There are a lot of dollars being thrown [at price] but those dollars are delivering a very poor return on investment," he said, adding that only a few CPG companies, such as P&G, Kellogg and Kraft, are successfully fending off further store brand gains by emphasizing brand value over price cuts.

CPG Product improvement and better marketing are the best ways to combat store brands, said Seitzinger, adding that 80 percent of CPG companies have specifically assigned executives to combat store brands over the past year.

Read These Related Articles:

• May Store Brand Dollar and Unit Sales Decline
• Nielsen: Retailers Should Tread Cautiously When Cutting SKUs
• Store Brands Tally Historic Market Share Gains
• PLMA Live: How Retailers Can Build Their Brands
• Store Brand Buying Behavior More Important Than What Consumers Say They Do

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