Private Label Brands Make Gains in Weak Economy

May 5, 2010

Private label brands are proving consistently popular with consumers looking to save money in a weak economy, according to research from The Nielsen Company.

Private Label Strongest in Commodities
Private label brands captured a 20 unit share or higher in 48 of 117 categories analyzed by Nielsen during the 52 weeks ended March 20, 2010. Private label brand share fluctuated widely by department, from a high of 40% for the dairy department to a low of less than 1% for alcoholic beverages. Nielsen analysis indicates this mirrors the typical pattern of store brand strength in commodity categories like milk, eggs and sugar, as well as those with little “consumer-perceived” differentiation such as first aid or wrapping materials.

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In categories with a history of strong brand marketing support like beer and candy, or those with a high demonstrated level of innovation such as deodorants and detergents, store brand share remains relatively weak and undeveloped. In these categories, Nielsen advises retailers to attempt to take market share away from smaller national brands with lower marketing budgets.

Regular Shoppers Purchase Private Label
Comprising just 20% of households and 46% of private label brand unit sales in 2008, “super heavy buyers” expanded to 22% of households in 2009 and chalked up nearly half (48%) of private label brand unit sales. In addition to fueling private label sales, super heavy also accounted for 34% of total purchases across the store in 2009.

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Heavy buyers accounted for another 15% of private label sales in 2009 and medium buyers represented 15%, with low and super low buyers only totaling a combined 13% of 2009 private label sales.

Store Brand Buyer Profile
Nielsen research indicates the following characteristics are typical of private label brand buyers:

  • Middle income families (between $30-$70K annual incomes).
  • Reside in rural and outer suburban areas.
  • Larger households with three or more members.
  • Younger female head of household.
  • Fastest-growing segment is families making $100,000 or more a year.

Private Label Brand-Boosting Strategies
Nielsen recommends the following strategies for retailers seeking to boost their private label brand sales:

1. Close the price gap.
2. Enhance product quality.
3. Advertise aggressively.
4. Promote consistently.
5. Shelve advantageously.
6. Reward heavy buyers.
7. Stimulate new user trial.
8. Cross-promote complementary items.
9. Retain high penetration, high frequency and strong niche brands.

Private Label Unit, Dollar Share Rise in ’09
Prepacked, UPC-coded private label CPG brands represented 21.8% of unit volume in 2009 while only comprising 10% of items in stores, according to other findings from The Nielsen Company.

Both unit and dollar share of private label CPG brands rose substantially in the 52 weeks ended December 26, 2009 compared to the 52 weeks ended December 27, 2008. Unit share increased 31.3%, from 16.6% to 20.8%, and dollar share increased 28.2%, from 17% to 21.8%.

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