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Bakery and Deli saw strong performances during 2013, and that is expected to continue. Here are three other categories to watch in the coming year.
Frozen.The frozen category has been able to achieve price parity, and on a few occasions in 2013, even price premiums vs. national brands, especially when looking at the 4-week YOY data. Retailers “gave back” quite a bit on private label share of revenue during July and August of 2013, but mostly by holding firm on price at a time when private label was historically more price-aggressive. This potentially gives private label a firmer footing for competing against national brands in 2014, by starting off closer to price parity.
HBC.Health and Beauty Care (HBC) is another category where private label brands have been able to carefully raise prices, and ultimately share of revenue, without a significant drop-off in unit sales—at least when looking at the 52-week rolling data. When looking underneath those numbers at the 4-week YOY performance, HBC private label has not been performing nearly as well in 2013 as it did in 2012. In February, the 4-week Index number was 105.5, but since that start, private label in the HBC category has hit the Index in the mid-80s, which means private label share of revenue has dropped off in 2013 vs. the 4-week YOY comparison. And in the 4 weeks ending October 6, 2013, private label not only gave back on the price differential, sitting at -14.3 percent vs. national brands vs. -14.0 percent in 2012, but private label also saw falling unit sales vs. the prior year period, ultimately resulting in 17.8 percent share of revenue vs. 18.1 percent in the 2012 4-week period. This left HBC worse off in the second half of the year for private label than it started when we began tracking in February.
General Merchandise.2013 was all over the place for private label GM, which leaves 2014 a year to watch. Private label brands have consistently tried to raise prices in GM—it is the category with one of the larger negative price differentials against national brands, at -22.0 percent in the 52 weeks ending October 6, 2013. But it also appear to be one of the most sensitive when it comes to price changes—almost any upward change in price results in falling unit sales vs. national brands. National brands appear able to more successfully raise prices in this category than private label. However, 2013 almost appeared as an investment year in GM for private label, where retailers were willing to take the hit on unit sales in order to close the price gap with national brands. With one of the lower Index numbers for a 4-week period that we’ve seen since beginning the Index (62.8 for the 4 weeks ending October 6, 2013), will private label brands adjust their strategies, or continue their price increases?
About the PLBuyer Index
The PLBuyer Index, based on IRI (www.iriworldwide.com) data analyzed and processed by Retail Systems Research (www.retailsystemsresearch.com), breaks down private label sales information into a “Total Store” Index, along with eight primary product categories: Bakery, Edible, Frozen, Non-Edible, Dairy, Deli, HBC (Health & Beauty Care), and General Merchandise. Index numbers above 100 indicate growth in private label revenue share year-over-year, while those below 100 indicate declines. For a complete list of PLBuyer Index articles, see www.privatelabelbuyer.com/index.