A mix of national and private label brands is integral to grocery retailer success, according to Acosta’s 2018 Why Brands Matter report.
National brands continue to dominate, with a 2017 market share of over $558 billion compared to $124 billion for private label brands. Overall, cost savings were the primary driver for private label sales, but most shoppers view national brands as superior to private label.
Grocery shoppers purchase national brand products due to their perceived higher quality in taste or performance, higher trustworthiness and better value, the feeling that more sales and coupons were available for national brands.
Shoppers felt “name brands are better than store brands” in 41 out of 53 categories, the report noted. In addition, shopping trips driven by national brand purchases were found to be 65% more valuable than trips to purchase private label brands.
In general, the more personal, innovative and differentiated the category, the more likely a shopper is to choose a national brand over a private label brand. Consumers who “exclusively” or “mostly” selected a private label brand tended to do so for staple items that can be consumed.
Value is one of the fastest-growing channels for retailers. But while the value channel largely emphasizes private label brands, this isn’t necessarily what is driving shopper traffic. Shoppers reported the highest influencers driving them to the value channel are best everyday prices (49%), better value for their money (47%) and cost savings/help with budget (45%).
Despite its growth, the value channel has limited appeal. Shoppers who frequent the grocery and mass/super channels find value retailers fall short in fresh foods, convenience and promotions.
Grocery retailers should keep in mind that shoppers turn to different brands for different needs.
“A clear takeaway for retailers is that they should understand the different roles national and private brands play,” says John Clevenger, an Acosta managing director and senior VP of strategic advisors.
“Manufacturers should concentrate on telling a compelling brand story and selling their expertise and understanding to build a brand connection with shoppers.”
For the full story, go to this week’s Food Institute Report.