- RESEARCH & AWARDS
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A study released last week by Accenture shows that U.S. shoppers remain committed to private label products primarily because they are cheaper than name brand products.
The study showed that 39 percent of shoppers surveyed said they increased their private label purchases as a result of the economic strain on their budgets, with 66 percent saying they bought those products because they are cheaper than name brand alternatives.
Nearly two-thirds of those surveyed, 64 percent, said their grocery carts were at least half full of private label products, and 77 percent said they would continue to buy the same amount of private label products, even if their disposable income rose to the level it was before the recession began.
“Consumer goods companies must respond to the threat of increasing competition from store brands as market position and profitability are at stake,” Accenture spokesman Bob Berkey said in a news release announcing the study results. “Extreme competition between retailers and consumer goods companies can result in inefficiencies and waste for manufacturers and retailers, and undifferentiated products for the consumer. Consumer goods companies must develop a balanced strategy of collaboration with retailers in some areas, and competition in others. This new dynamic – where competitors become partners – will require a considered focus from manufacturers.”
The study also found that shoppers were more satisfied with the quality of private label products than ever, with only 9 percent saying they would not buy private label products because they believed the quality or taste was inferior to name brand alternatives.
Half of those surveyed said the quality of private label products was just as good as name brand alternatives, while 42 percent said they trusted the retailer’s private label products and 28 percent said they preferred the private label product to the name brand alternative.
Finally, variety was also singled out by shoppers in the study. Nearly half (48 percent) said stores offered a greater number and variety of private label products than before, and more than a third (36 percent) said private label products were simply another brand on the retailers’ shelves.
“Undoubtedly, uncertain economic times are a major factor in the growth of private label, but it is the increased sophistication of stores’ own brands that has helped them retain customers,” Berkey said. “Consumer goods companies must create a clearly defined private label strategy that understands the unique attributes that drive preference and loyalty in their consumer, engages with them across multiple channels and creates an excellent customer experience.”