Much has been made about evolving consumer attitudes to private label products, but private label penetration has actually slightly dipped across most CPG channels over the past 2 years, according to [download page] a November 2012 report from SymponyIRI. Penetration has dropped by 0.3-0.4% points in the grocery (96.7% penetration), mass/super (86.3%), drug (60.1%), dollar (34.9%), and convenience (6.7%) channels, although it has increased by 1.1% points in the club channel, to 42.9% penetration.
For the most part, private label buy rates are following that pattern. That is, the buy rate for private label products is not growing as fast (or has declined more quickly) than the industry average. That’s the case for the grocery, mass/super, drug, and dollar channels.
Private Label Share of Spending Holds Steady
Despite these trends, private label share of spending is holding ground across the grocery, drug, and convenience channels. Looking at the 52-week period ending September 9, 2012, and comparing it to the same period a year earlier, the study finds that private label’s dollar share grew 0.2% points in the grocery channel, to 18%, 0.2% points to 16.3% in the drug channel, while remaining flat in the convenience channel, at 1.6%. (Nielsen also found only a small influence for private label goods in convenience stores, in a study released in October.)
Across CPG channels, SymphonyIRI data shows that private label accounts for 14.4% of dollar sales and 17.1% of unit sales. Dollar share is up 0.4% points from 2 years ago, while unit share is down 0.3% points.
Families Up Private Label Spending
While 47% of US consumers are buying more private label goods now than they did before the economic downturn began, that figure varies by segment. 56% of mothers say they buy more private label goods today versus 41% of male shoppers. And 53% of shoppers from households with children buy more private label today compared to 44% of those from childless households.
As long as consumers believe “times are tough,” private label goods will likely keep their foothold in the market. As of July 2012, 64% of grocery shoppers claimed that half or more of the groceries they buy were private label, and only 14% say that store brands account for less than 10% of their grocery purchases, per an Accenture study. Price was the key driver in selecting store-brand and private label products, with roughly two-thirds of shoppers saying they buy store brands because they are cheaper.
Private Label Savings Mostly in the Double Digits
So how much cheaper are these products for consumers? According to the SymphonyIRI report, “Reversal of Fortune: National Brands Pick Up Gains on Private Label,” private label offers a higher than 30% discount across 23% of CPG categories. Several of those categories are in the healthcare category (e.g., cold and allergy medication), which accounts for about 5.6% of consumer CPG spending. But in this category, price per volume of private label goods is generally on the incline, and the gap is narrowing with national brands.
Taking a broader look at the data, on average three-quarters of private label products are sold at a discount of at least 10% from national brand prices. That’s down from 80% 2 years ago.
About The Data: The findings of this report were compiled based on information from SymphonyIRI Consumer Networkâ„¢ and SymphonyIRI Market Advantage.