Nielsen: Strategies to Boost Store Brands Market Share

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

July 26, 2011

While store brands growth has flattened since the end of 2009 due to national brands accelerating promotions and marketing, there is room for U.S. store brands to grow in the future, according to Todd Hale, senior vice president, consumer and shopper insights for Nielsen.

“Long-term growth will be fueled by both consumers’ interest in value and retailers’ focus to drive margin and build banner equity,” Hale wrote on the Nielsen Wire blog. “Retailers need to manage their store brands like manufacturers do – by investing in research to identify the best new products for roll-out, combined with the most effective marketing/merchandising support to build awareness, generate trial and repeat purchasing to yield sustainable and profitable volume levels.”

Today, private label unit market share is at approximately 22 percent, with CPGs dominating the balance, he said, noting, “the reputation of store brands today continues to improve.”

Three-quarters of consumers believe store brands are a good alternative to name brands and two out of three agree that quality is also on par, according to Nielsen research. “Fewer consumers,” he wrote, “view store brands as geared towards people on tight budgets who are unable to afford the best.”

Hale outlined the following ways retailers can continue to capitalize and grow their store brands:

• Expand variety. “Half of consumers said they are willing to buy more store brands if there is greater variety. Do your homework to assess opportunities among your core shoppers. Don’t introduce new lines or items at the expense of high penetration and/or high frequency brands, which can drive your shoppers to competitive retailers.
• Keep prices affordable. “The majority of consumers are not willing to pay more for store brands. The same is true for brands, but an assessment of price level and price gaps between your store brands and [national] brands can yield stronger sales and profits.”
• Invest in quality. “Value is important, but quality goes hand-in-hand. Consumers dissatisfied with quality will buy less. Store brands don’t need to be just about low prices; a tiered store brand approach can allow you to build sales among diverse shoppers.”
• Build strong brand equity. “About 40 percent of consumers claim to only trust store brands from retailers they have confidence in. Enhance your shopper connection with a strong store brand program.”
• Connect with younger consumers. “Younger generations are strongly committed to store brands and low prices. Not only do they view them as good alternatives to name brands, but almost half (42%) said that some store brands are higher quality. These shoppers are also more engaged in online information seeking, so look for opportunities to connect with them via digital communication vehicles.”
• Reach older consumers. “The Greatest Generation leads the way in believing store brands are ‘extremely good value for the money.’ This group is a prime segment for trial programs. Leverage in-store sampling programs, money-back guarantees, and communications through your paper circulars.”
• Appeal to lower-income consumers. “Necessitated by a need to stretch dollars further, lower-income consumers have a stronger commitment to store brands. These shoppers are also less inclined to believe that store brands should always include a retailer’s name on store brand products. Have some fun naming your store brand items.”
• Understand Hispanic consumers. “Hispanics place great importance on getting the best price and say they will buy more store brands provided there is more variety available. Based on population projections, Hispanic households will represent the single biggest growth opportunity for years to come; now is the time to make an investment to understand how your store brands connect with Hispanics.”
• Broaden appeal for African American and Asian consumers. African American and Asian consumers are very committed to [national] brands, so look for opportunities to co-promote the right combination of branded and store brand items and be careful not to invade a branded space with a store brand offering and turn away shoppers.”

Read These Related Articles:

• Kroger Posts Impressive Q4, Though Private Label Share Declined Slightly
• Costco Private Label Market Share Under Expectation
• Private Label Dollar Sales Gains Buck Industry Downward Trend
• Supervalu Private Label Rises Since Pulling Management In-House
• Nielsen Forecasts Long Growth Pattern in U.S. Store Brands

Most Read

Guest Columns

Grocery Aisle Innovation Key to Retailer and Consumer Cost Savings

Retailers are redesigning the aisle, appealing to environmentally friendly consumers and capitalizing on market trends to make their private label brands more competitive.

Source: Tetra Pak Inc.

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

See All Guest Columns »

Press Releases