New research done exclusively for PLBuyer also finds that higher income shoppers are more likely to buy private label seafood
U.S. shoppers increasingly are likely to visit a food retailer specifically for its private label products, according to results of a new survey done in November, 2011, exclusively for PLBuyer by Consumer Science, a Dallas/Fort Worth-based research firm.
The survey of 400 consumers found that 62 percent say they visit a store at least sometimes specifically to buy its private label offerings. That’s up from 53 percent when Consumer Science asked the same question for a PLBuyer survey in June.
Respondents say they fill an average of 30 percent of their typical market basket with private label products.
Asked about two specific product categories in this latest survey, roughly half of respondents say they buy store brand seafood and, of those, 69 percent say that it matters to them that the seafood they buy is from sustainable sources.
Those earning more than $50,000 annually are more likely to purchase private label seafood, 61 percent compared with 25 percent of those with household incomes of less than $50,000 annually. But that gap is affected by the fact that fewer lower income respondents buy any seafood at all, branded or private label. Roughly 31 percent of the lower income households buy no seafood compared with only 19 percent of the higher income group.
PAPER AND BIG BOX RETAILERS
Asked about where they buy private label paper products, defined in the survey as napkins, paper towels and toilet paper, 43 percent say they buy from mass merchandisers, 27 percent say from supermarkets and 21 percent say they buy from club stores.
Those buying private label paper products at mass merchandisers and club stores cite price as their main reason for doing so while those who buy at supermarkets give convenience, i.e. they already were shopping at a given supermarket, as their main reason for buying where they do.
As in prior surveys, the November poll found most shoppers buy private label items; 95 percent of respondents say they buy private label and 81 percent say they believe private label product quality is as good, if not better than, that of name brand products.
Consumers remain pessimistic on the economy, the survey finds. Only 27 percent see the U.S. economy improving in 2012 while 37 percent expect it to get worse and roughly 37 percent say it will stay the same.
“Younger and higher income groups are more optimistic,” Consumer Science says in the report it supplied PLBuyer along with the survey results. “Even if the economy improves, just 6 percent state that they will buy less store brands.”
The majority of respondents, 75 percent, say they will continue to buy the same amount of private label products even if the economy improves. Those making less than $50,000 annually are more likely to decrease their private label buying in an improving economy, the survey finds. In that income group, 13 percent say they will buy less private label in an improving economy compared with only 4 percent of those making more than $50,000 a year.
Interestingly, lower income households, those making less than $50,000 in annual income, are more likely to question the quality of private label than are those earning more than $50,000 annually. Approximately 28 percent of respondents in the lower income bracket question private label quality compared with only 17 percent of those in the higher bracket.
THE GENDER GAP
Women respondents have a slightly higher quality perception of private label than do men, the study finds. Among men, 60 percent say private label and national brands are of equal quality and 17 percent say private label is of superior quality. Among women, 81 percent say the two groups are of equal quality while 2 percent see private label as superior.
Quality perceptions of private label also are higher among younger shoppers. In the 18-34 age group of survey respondents, 11 percent rate private label products of superior quality and 73 percent put them at equal to national brands. In the 35-54 age group, 75 percent rate them at equal quality while only 3 percent say private label is of superior quality. In the 55-plus group, 93 percent rate them equal but none rated private label as having superior quality.
Looking at shopping habits, the survey finds that “the trend for visiting a specific grocery store because of its store brand products continues to grow with 33 percent now stating they do and a further 29 percent stating that it is sometimes their motivation,” Consumer Science reports.
When Consumer Science asked the same question for PLBuyer in a June survey, 27.6 percent said they visit a store specifically for its private label products while 25.3 percent said they sometimes visit a store for its private label offerings.
The good news for private label retailers continues when responses are examined by respondent’s age. Younger shoppers, those between 18 and 34 and the core consumer of the future for food retailers, are the most likely, 44 percent, to visit a specific store because of its private label lines. In the 35 to 54 age group, 29 percent are likely to visit a specific store to buy its private label products.
Examined by income of respondents, among those making more than $50,000 a year, 40 percent visit a specific grocery store because of its private label products, the survey found. That number drops significantly, to 22 percent, for those making less than $50,000 annually.
Approximately 51 percent of male shoppers are likely to visit a specific store for its private label offerings compared with only 27 percent of female shoppers, an interesting finding given that most supermarkets still aim their marketing primarily at female shoppers. Men also reported buying a larger private label basket percentage than did women, the study finds.
Men could prove a perplexing private label marketing target, however. “Men tend to provide more dichotomous responses than females when considering private label - they are more likely to buy just store brands or just name brands, more likely to consider store brands higher or inferior quality to name brands, more likely to visit a store because of its store brands and more likely to have a larger store brand basket percentage,” Consumer Science reports.
That all could mean that swaying male purchase behavior through marketing and in-store merchandizing will be more difficult than marketing to women who may not have as strong opinions about private label as men seem to have. PLB
Consumer Science specializes in primary consumer research. It utilizes a broad range of techniques and technology to customize research that delivers each customer the most value.
A qualified staff of researchers and moderators provide turnkey research, including study design, respondent recruitment and customized analysis and reporting. The offerings, combining traditional interviewing techniques and the latest technology, include intercepts, one-on-one, dyads, triads, focus groups, large sensory panels, in-home test, surveys, social media monitoring, video analytics and Web analytics. www.mmiconsumerscience.com
Make it work: Private label packaging has to deliver on features promised
Here’s a look at what’s ahead for packaging.
PLBuyer Editorial Director John N. Frank sat down at the 2011 PLMA trade show with a cross-section of packaging experts to discuss the current state of private label packaging and what to expect for packaging in 2012 and beyond. What follows is an edited transcript of our discussion. To read the full transcript, go to PrivateLabelBuyer.com. The roundtable was sponsored by Sealed Air Cryovac.
PLBuyer: What do you see as the major packaging trends to watch for in 2012?
Michael Quint: Sustainability is a big one. What packaging do you have that is 100 percent recycled? To what degree can it be recycled? I think [packaging’s environmental] footprint is becoming an issue. Certainly you are seeing some smaller package size offerings. I [also] think resealability is still key.
Jerry Kelly: The functionality of the package. It’s got to be easy open. The reclose feature has to be more than just saying that, it’s got to work time after time.
Lindsey Hurr: From the design perspective, communications, but at this point in time, we’re starting to over-communicate on packages. You see a lot of just too much information.
Chris Durham: And we are not solving for her [the shopper’s] needs, honestly. What solution am I bringing her and how am I helping her take care of her family? So how does [packaging and the product inside] help her life, how does it help her take care of her family? What are the benefits that actually mean something to her?
PLBuyer: What makes for a successful package?
Kelly: Well the package has to perform, especially when you have extended shelf life. Is that product fresh in the first week? Is it fresh on the last week? Well, that’s their intention and the package has got to live up to that. So performance is certainly a key packaging element.
Paul Weitzel: We see issues in frozen [packaging]; a lot of packaging breaking down and [that’s happening while] the frozen departments are only growing in every store that we see being built. So quality must continue to be improved.
Quint: Whatever information you can put on the package, the product has to deliver what is conveyed on the package, whether it’s a usage shot or it’s some statement of quality. If the product doesn’t match up to the packaging, then you’ve got your first and only sale.
PLBuyer: When you talk about packaging breaking down, is it the structure of the package?
Weitzel: I think it’s the material, you can see some packages breaking down.
Kelly: One way to address that specifically is to add more packaging, put a shrink wrap around it. [But] then are you getting away from a reduced packaging [footprint] strategy.
Weitzel: I think that a package, to be successful, also has to stand up to some of the new shelf conditions that we have. We are seeing a lot more shelving innovation, in the refrigerated case right now [for example], [there’s] spring-loaded, gravity-fed, more packaging trying to get upright. There is a lot more of that coming because retailers are trying to cut labor cost and reduce inventory and when everything is front-faced it looks great. We are going to see a lot more shelving innovation coming and the packaging is going to have to work in that environment.
PLBuyer: Regarding retail-ready packaging, is demand growing?
Weitzel: Some of the big retailers are very interested in reducing cost, and labor cost is the one cost that they can control. Things like packaging that can go right to the shelf, whether it’s a tray or a case pack or pallet drop; we are going to see more of that coming [to cut retailer costs].
Durham: It’s a lot bigger than just the labor issue if [retailers] are going to do it right. [It’s about] we can actually use [retail-ready packaging] to better our merchandise and also sell more stuff.
PLBuyer: Can there be a design aspect to natural and organic packaging?
Kelly: Design is crucial. [We’re] working with a retailer right now and [putting] its color scheme on its natural line. It’s a destination category in the case [so] it’s going to look different, physically different than the other products.
Weitzel: I think extended shelf life may be important [here] too. We’re seeing a lot more open code dated products than ever before and even the big national brand guys are moving more and more, putting open code date on the package and, obviously, that has a ramification for days of supply.
PLBuyer: So, with all of these considerations in mind, what makes for a successful package?
Quint: It has to function and do what it promises, whether it’s reclose or easy open. It’s got to reclose correctly. If I take it and I turn it upside down and shake it or anything else, [it needs to remain closed] because it’s going to be treated that way in the refrigerator at home. And then it needs to be able, from a graphic designer’s standpoint, to communicate what it does; if there is something that is unusual about it, if it’s a new opening or closing type of product or anything, it needs to convey with clear instructions how you do it.
Hurr: For us, it depends on its tier. Our design team has [guidelines] as to if it’s a value tier, the descriptions are large. If it’s a premium, descriptions are smaller. It just depends on what you are trying to communicate.
Kelly: Keeping it simple [in terms of packaging instructions], showing pictures, communicating. Simple communication is really the key to success.
PLBuyer: To have the perfect package - stronger, functional, and sustainable - will mean a more expensive package, will consumers or retailers be willing to pay for that?
Hurr: I think consumers are worried about sustainability but they are more worried in this economy about the money in their pocket. So if it’s going to cost them, if they’re going to have to pay more for a more sustainable package, I think they’ll choose not to. So you have to be very careful.
Quint: I would agree. I mean I think if everything is equal [and the] sustainability piece of it is clearly communicated, they’ll move in that direction. But if it’s 50 cents more to have a sustainable package, I don’t think [consumers] are there yet, in most cases.
Kelly: We have options for sustainable packaging [but] one of the issues is you don’t have the economies of scale. If we were making a million a day it would be different and the price would come down. So we are in this position - people want it, it performs, we have trays for different parts of the store, they perform differently but they cost more because we’re not selling a lot of them. So it’s tough right now.
PLBuyer: How complicated are the various front-of-packaging labeling schemes making the packaging challenge?
Hurr: It goes back to the clutter situation. It’s a nice idea but we’re all over the board right now; everyone’s trying their own different tactics to convey health issues.
Kelly: You start out with a good idea but the execution is all over the board and so it does make it challenging.
PLBuyer: Are any of these front-of-package systems connecting with consumers?
Durham: I was with Delhaize when it launched Guiding Stars. It’s an impressive program, there’s a lot of science behind it. What worked well for it was that it gave [the shopper] an easy way to say, okay, this is two stars, this is three stars. Is it any better or worse than the rest of them? Probably not. I think at the end of the day all those programs have to come down to [is], are you actually helping her shop or make a better decision?
Weitzel: The issue we have is [that] even though more consumers take a shopping list [to the store], a lot of decisions are being made in the store. [So], to connect with shoppers you’ve got to do it at the shelf and so everyone is trying to throw as much information at the shelf as they can. So it’s on labeling, it’s on the end of the shelf, signage above the shelf, markers, navigational signs, everything. There’s almost so much information right now that we have clutter; it’s a challenge.
Quint: The problem is, what’s the definition of healthy? It depends on what study you read. If you have high cholesterol or if you’re gluten intolerant, you’re going to be looking for different requirements in a product, so a lot of it is based on the individual in terms of their definition of what’s healthy. So how do you standardize health?
That’s where all naturals come into play. Of course, you don’t know what all natural is necessarily.
Weitzel: There’s just too much to be able to communicate that on the shelf and that’s the problem with trying to communicate everything in shelving. We’re overwhelming them [shoppers] on the package.
PLBuyer: Is Gen Y shopping, and reacting to packaging, differently than its parents?
Quint: I think so, I think they’re much more educated and they understand the tools to go answer a question very quickly if they want to. They expect better quality.
Durham: First of all [for Gen Y], the local food movement’s been huge. And then you’d layer in food safety on top of it [as a Gen Y concern] and all of a sudden the mass production [that was] a cool, sexy thing that came out after World War II doesn’t look the same to that generation. So they are starting to ask questions and wanting to know where the food was sourced and how it was made and what it’s packaged in.
PLBuyer: If more consumers are into fresh, does that affect the packaging and what they expect from packaging?
Kelly: Absolutely, packaging can convey fresh. It’s all about packaging design, dialing in the package to the product that you’re selling and making sure it matches up.
PLBuyer: European packaging always seems to stand out, why? Have they gotten the message that packaging is more important than just being a container?
Quint: It goes back to how they shop differently than we do. They don’t go in and buy for the week, or the next week and a half, in a lot of cases. It’s ‘I’m buying for today and tomorrow,’ so it’s smaller portion sizes which then allows for different packaging, allows for a lot of different packaging.
Durham: And they’re not afraid of just saying what it is and being minimal about it and then spending a lot of money on photography. Go look at Tesco, look at that [package], it says what it is and there’s a beautiful picture and a sensible font and they’re done.
Kelly: Well they do take a minimalist approach. When it comes to packaging, I think they are willing to try different things and maybe we are a little too conservative in some regards.
PLBuyer: There’s been a lot written in 2011 about cost pressures on commodities and other ingredients, are we seeing that in packaging as well and what’s the outlook for next year?
Kelly: Volatile. You have unrest in the Middle East, you have other issues going on, and you have countries on the verge of default. We’re more global than we’ve ever been and, certainly for our company, we’re a global company and we’re impacted big time by a little bump somewhere else in the world. Most of the [raw material used in fresh food packaging] is an oil-based derivative and that is a very fluid and dynamic market. So that’s going to be a big issue going forward, there is still a lot of instability.
Packaging roundtable participants
National Retail Account Manager
Sealed Air Cryovac
Vice President, Chief Customer Officer
West Liberty Foods