In addition to coupons and side-by-side comparisons, in-store sampling has become a very popular measure among companies offering store brands, reports the Food Marketing Institute’s (FMI) “The Food Retailing Industry Speaks.”
Up from nearly 76 percent last year, 81.5 percent of retailers conduct regular in-store sampling with private-brand products this year, the survey finds. Sampling can be especially efficient among upscale shoppers new to the category, the report authors’ note.
Compared with 2009, about seven in 10 retailers have already increased display space and shelf space for their private-brand offerings in 2010. About the same proportion also increased the number of sales promotions surrounding private label. However, the report indicates, significantly fewer retailers allocated a greater percentage of their advertising budget to the promotion of private brands, at just more than 49 percent. For the most part, retailers kept advertising budgets unchanged.
The report includes a survey of retailer beliefs and attitudes related to private label.
Fully 98.6 percent of grocery retailers carry private-brand products. Three-quarters have multiple tiers within private brands - often value, core and upscale offerings – Retailers selling organic private-label products also increased this year to 76.5 percent.
With an average agreement level of 4.1 on the 5-point scale, retailers believe premium private-brand products attract higher-income shoppers looking to save money due to recessionary pressures. An expanded selection of ethnic, organic and other products also attract increasing numbers of ethnic shoppers to private label, retailers believe.
Retailers are optimistic that the greater interest in private brands is here to stay, even when the economy recovers. This staying power receives an average agreement score of 3.9 on the 5-point scale.
The share of private-brand SKUs as a percentage of total items has increased for several years running. On average, 9.7 percent of total items in stores across the country are private brands. Retailers anticipate a strong increase in the number of private-brand items on their shelves over the next two years, the survey indicates. More than 82.5 percent expect to grow their private-label inventory and the remaining 17.5 percent plans to keep current levels. Not one retailer anticipates a reduction in private-brand offerings.
Additionally, nearly 73 percent of retailers say their 2009 private-brand growth rate was higher than the year prior, indicating accelerated consumer adoption. The remaining roughly 26 percent indicate the growth rate is similar to the prior year. FMI says not one company experienced a decline.
Two-thirds of retailers (63 percent) attribute growth in private-label sales about equally to current and new store-brand shoppers. Slightly more than one-quarter mostly see an increased penetration among current store-brand purchasers.
Data for the FMI annual review are based on surveys of 76 food retailers operating 24,075 stores, in addition to filings with the Securities and Exchange Commission, financial data from an additional 2,000 independent operators, information from the U.S. Bureau of Labor Statistics and the U.S. Census Bureau. The analysis also is based on other FMI research, including 2010 U.S. Grocery Shopper Trends and Annual Financial Review 2009.