CPG brands have been challenged in recent years by the ascent of private label brands, and new research from The Integer Group finds little solace for name brands. The latest Checkout report [download page], based on a survey of 1,215 adults, finds that one-third are buying more private-labels than they did last year.
By comparison, just 1 in 10 said they’re buying fewer private-label brands than last year.
The one-third of respondents buying more broke out as follows:
- 8% who will probably buy even more in the future; matched by
- 9% who will probably switch back to name brands in the future; and
- 15% who will probably stick with their private-label habits.
If there’s a silver lining, it’s that these figures represent positive trends from a similar survey fielded 5 years ago. In that study, a greater proportion (30% vs. 23% this year) had bought more private-label brands over the past year and saw that allocation staying steady or increasing, while slightly fewer had felt an urge to return to name brands in the future.
Whether those fairly muted trends are enough to turn the tide remains to be seen. Store brands already account for one-fifth of FMCG sales, and there are strong indications that deal-seeking behavior continues to be widespread among CPG shoppers, particularly Millennials.
Better, But Good Enough?
Other results from The Integer Group’s survey likewise show some positive trends, but from a difficult base for name brands.
This year, a greater proportion of respondents than in 2012 agreed that with several statements about name brands, including that:
- Name brand products offer more new products, varieties, and innovations (55%, up from 51%);
- Name brands are more reliable (46%, up from 39%); and that
- Name brands are better-quality products (44%, up from 36%).
While those are encouraging developments for CPG name brands, those results at the same time indicate that only a minority of respondents agree that name brands are more reliable or higher-quality than private-label brands.
Moreover, in a recent study, IRI found that more than 8 in 10 feel that store brands are just as good in quality as national brands, and more than three-quarters feel that store brands are better value than national brands.
CPG brands also have to contend with Amazon, which is investing in its own private label products. In fact, Alexa appears more likely to recommend those products than traditional brands, according to L2 Research.
So while these latest developments may show some positive trends, it seems as though CPG name brands have their work cut out for them…