Merchandising Features / Omnichannel / Tactics
Focus on Digital

Will We Burst the Store Brand Bubble?

November 6, 2013

Store brands have seen breathtaking growth in recent years. In 2012, sales surpassed $108 billion and unit share climbed over 21 percent, according to PLMA and Nielsen. The outlook has never been better and it seems all we have to do is “ride the wave.” There has been very little to suggest that there would be anything to slow us down…until now.

In the past few years there has been a dramatic shift away from conventional media toward social and digital marketing channels, particularly among Millennials. The average newspaper subscriber is now 60 years old, TV has become extremely fragmented, and shoppers use their digital devices to get information anywhere. National brands have seized upon this opportunity to re-engage with their consumers more strongly than ever before while store brands risk becoming increasingly disconnected. On an industry level, CPG companies now spend 2.3 percent of their total sales in social and digital media marketing, and the trend is accelerating. But despite the efforts of a few leading-edge retailers, store brands are mostly being left behind.

National brands actively pre-empt purchase decisions through direct consumer contact via social media, creative new promotional partnerships with retailers, and digital coupon programs that are fully integrated with retailer digital ad formats. For example, Safeway recently announced an expansion of their Foursquare promotion with Pepsi that enables consumers to receive discounts and other benefits merely by “checking-in” at the store. Kraft and others regularly run contests, promotions, and other retailer-specific events effectively enabling them to function, from an exclusivity standpoint, as if they were store brands. 

Other ways manufacturers are continuing to buy back lost market share:

• Leveraging Facebook — Many national brands aggressively pursue getting as many “likes” as possible – not just because they want to be loved, but because it provides a database of likely purchasers to whom they can offer promotions outside of the retailer’s advertising.

• Digital coupon offers — The vast majority of food and drug chains now are linked with the major coupon platforms such as Coupons.com, and most retailers link their digital ads to these providers so hundreds of dollars of coupons can be downloaded or added to the customer’s loyalty card. But store brands are not included.

 So how should store brand manufacturers and retailers respond? The first and most important step is to start a dialogue on getting digitally engaged. This is not a “best price” discussion, but a strategic commitment to collaboratively build the retailer’s brand for the digital age. Without this process, then the store gains of the past few years will surely slip away. 

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