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General Merchandise, as measured for the PLBuyer Index, consists of Household items, including batteries, coffee filters, hair accessories, kitchen storage, light
bulbs, and office products, among others. It also encompasses Automotive, Outdoors and more, which includes antifreeze, baby accessories, blank audio/video media, fire logs and fire-starters, motor oil, fertilizer and weed killer, pantyhose and socks, as well as photography supplies, plastic bottles, and playing cards, among others.
Since we began tracking the PLBuyer Index in February, General Merchandise has posted a considerable turnaround. In the 52-week period ending February 24, 2013, the Index for General Merchandise languished at 75.6. As of the 52-week period ending June 16, 2013, it currently resides at 92.7 (Figure).
When we started tracking the Index in February, private label general merchandise brought in approximately $3.4B in revenue vs. $19.8B for national brands during the 52-week period. Private label achieved an average price of $3.83 vs. national brands’ average of $4.76.
During the 52-week period that ended February 24, 2013, private label share of revenue for General Merchandise was 14.7% of total store revenue, a decline from 15.1% share during the equivalent period in 2012. While prices rose across the board for both private label and national brands from 2012 to 2013, private label took a larger relative price increase - dropping the price difference vs. national brands from -21.4% in 2012 to -19.5% in 2013. Unit sales suffered as a result - private label share of units during the 52-week period ending in February fell from 18.4% in 2012 to 17.6% in 2013.
So what changed? Private label appears to have managed a careful balancing act in General Merchandise categories during the next four months, outpacing national brands in driving price increases without seeing a significant drop-off in unit sales. The net result is that by the 52-week period ending June 16, 2013, the gaps between unit sales and revenue both narrowed significantly. Private label share of revenue for the period was 14.9% vs. 15.0% for the equivalent period in 2012. The price difference between private label and national brands has narrowed by over a full basis point, from -20.9% in 2012 to -19.8% in 2013. And while private label share of unit sales is still lower than the year before (17.9% in 2013 vs. 18.2% in 2012) the price increases have started to offset any corresponding unit sales declines.
For the 52-week period ending June 16, 2013, the revenue that private label general merchandise brought in vs. national brands is relatively unchanged from the period ending in February: approximately $3.4B in private label General Merchandise revenue vs. $19.7B for national brands, for a 14.9% private label share. But the components of that share have changed significantly: private label achieved an average price of $3.83 vs. national brands’ average of $4.78, not too much of a difference vs. the period ending in February. But private label share of unit sales has grown from 17.6% in February to 17.9% in June.
Can the General Merchandise category maintain its private label momentum? The category will have to continue to manage its prices closely. In the last few 4-week periods, private label’s price difference vs. national brands has actually increased - in June, private label had a -28.0% price difference vs. national brands, when in 2012 the price difference was lower, at -26.0%.
Letting national brands take the bigger price increases has driven a significant shift in share of units in private label’s favor, and the net result has been that private label share of revenue has brought in some big improvements over the equivalent periods in 2012. But private label may not be able to hold the line on price forever. If private label General Merchandise has been delaying price increases in the short term, they may have to give back some of those share of revenue gains in the long term.
The first PLBuyer Index was unveiled at the PLB360 Conference on June 12, and showed private label sales dipped in the four weeks ending May 19 from a year earlier, but continued growth since the start of 2013.
The index – compiled from data gathered from total U.S. multioutlet supermarkets, drugstores, mass market retailers, military commissaries and select club and dollar retailers – measures the health of the private label industry each month. Index numbers above 100 show growth in private label revenue share year-over-year, while those below 100 show declines.
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