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Consumers See a Recession Lasting Years, Even Though it's Officially Over

November 24, 2010
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Americans remain pessimistic about the economy and that appears to be translating into continued good news for private label product sales, according to the latest quarterly consumer sentiment survey done exclusively for PLBuyer by Lightspeed Research.

Americans remain pessimistic about the economy and that appears to be translating into continued good news for private label product sales, according to the latest quarterly consumer sentiment survey done exclusively for PLBuyer by Lightspeed Research.


Roughly 73 percent of respondents to Lightspeed’s latest survey think it will be two to four years or longer before the recession ends. That pessimism seems to be common across racial, demographic and income lines of respondents, everyone seems equally pessimistic, Lightspeed found.


Against the backdrop of that pessimism, private label stands out as a continued winner. This survey, like the one Lightspeed conducted for PL Buyer in June, shows people have turned to private label goods in this recession and they intend to keep buying them even in brighter economic times.


The latest survey, conducted in September, found slightly more respondents than in the first survey, 46 percent vs. 45 percent, saying they are buying more store brand products in the recession than they did prior to it. But Lightspeed notes in its analysis that the levels are essentially the same.

 

RACE AND ETHNICITY

Hispanics and Caucasians are buying more private label than African-Americans, the survey finds. And those earning less than $50,000 a year are buying more than those earning more than that amount, 50 percent vs. 42 percent.


Across all respondents, 13 percent say they will be buying more store brands when the recession ends, up slightly form the 11 percent who said that in the earlier survey, a positive for store brands.


The number that say they will be buying the same amount remains constant at 8 percent. Of those earning less than $50,000 annually, 14 percent say they will be buying more store brands after the recession compared with 11 percent of those making more than $50,000, but interestingly 10 percent of those making less than $50,000 say they will be buying less store brand products after the recession, compared with only 7 percent of those making more than $50,000, indicating some dichotomy of thinking about store brand plans among those in the lower half of the income divide.


“Price is the main reason almost all respondents chose to buy store brand products with no difference across age, gender, income or wave of the survey,” Lightspeed reports in its survey analysis. “A majority of respondents buy store brands because they are cheaper. It’s not surprising therefore that the recession is driving lower income earners to buy more store brand products. This result is consistent with the first survey”, Lightspeed reports.


Looking at recession sentiment, Lightspeed finds that “African-Americans are far more likely than caucasians to believe the recession will be over in six to 12 months. Lower income earners are more pessimistic, with almost one third believing that there are at least four more years of recession to come.”

Looking ahead, Lightspeed says “The majority of respondents don’t think they will change their buying habits when the recession is over, while only 8 percent said they would be buying fewer store brand products.”


Other key findings of the survey include:

  • 91 percent of respondents buy at least some store brand products.
  • 78 percent say store brand quality is equal to that of national brand quality.
  • 17 percent see store brand quality as inferior to that of national brands.
  • Consumers age 18-34 are the most likely to see a quality difference between store brands and national brands.
  • Only about 40 percent of respondents are aware of premium quality store brand products and that awareness level is shifting; it rose 8 percent in the western region of the untied states since the prior Lightspeed survey, while falling 7 percent in the Midwest.
  • 19 percent of respondents visit a particular store because of its store brands.
  • 28 percent are influenced by package design.
  • 32 percent have bought organic store brands.

 

Asked about the recession, “95 percent say the recession is not over with 73 percent believing that there are at least two more years of recession to come,” Lightspeed reports.


Private label retailers should note Lightspeed’s finding that the youngest consumers surveyed have the biggest issue with private label quality. That finding has remained consistent from survey to survey, with 22 percent of that demographic cohort saying in each survey that they see store brand quality as inferior to that of national brands. The study also finds that “higher income earners were more likely to consider store brand products of lower quality,” Lightspeed reports.

 

AGE MATTERS

While younger consumers are concerned about quality, they also are likely to be influenced by packaging, the survey discovers, with 41 percent of those 18 to 34 saying packaging design influences their buying decisions. Higher income shoppers, those making more than $50,000, also are more likely to be influenced by package design, suggesting that private label retailers can address quality concerns in these two groups by improving their packaging.

 

ORGANICALLY SPEAKING


Looking at organic store brands, the survey finds that younger consumers are the most likely to buy organics while “Hispanic (40 percent) are more likely to have purchased organic store brand products when compared to whites (30 percent) and African-Americans (35 percent),” Lightspeed reports.

Delving further into organic buying habits, Lightspeed finds that “those living in the West and those earning more than $50,000 are the most likely to have bought organic store brand products.”


Lightspeed sent this survey to its Lightspeed Research USA online panel in September. The survey drew 2,329 respondents of which 2,100 say they buy at least some private label products. This survey excluded people who had taken part in the first survey in June.


Lightspeed, Basking Ridge, N.J., maintains proprietary online consumer panels throughout the world to produce its research. Lightspeed offers data collection services including survey design, sample management, programming and reporting and has offices throughout the United States, Europe and Asia Pacific.  Lightspeed (www.lightspeedresearch.com) is part of Kantar, the information insight and consultancy division of WPP.  

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