Private Label Buyer

Analysts Provide View Of Private Label World At PLB360

June 19, 2013

A variety of analysts and experts took the stage last week at the PLB360 Conference in suburban Chicago to give attendees a look at the landscape of private label today.

Nielsen’s Todd Hale kicked off the event by talking about the opportunities in alternative channels, where private label sales rose in the value, drugstore and convenience store channel while remaining basically flat in supermarkets.

But he said the true growth was expected in e-commerce, which would see growth of 10 percent over the next five years. Other high-growth areas included pet stores, dollar stores, supercenters and club stores.

“Amazon doubled Kroger’s sales growth in 2012,” Hale said. “Amazon is expected to grow $97 billion in sales in five years, and that’s probably at the expense of brick and mortar retailers.”

He added that private brands would continue to drive growth year over year, but not as quickly as it had since the recession started in 2007.

“You’ll see faster growth outside traditional grocers,” he said, citing retailers such as Aldi, Save-A-Lot and Wegmans as examples.

Jonathan Asher of Perception Research Services backed up Hale’s assessment while talking about PRS’ latest shopper research on private label. Asher said natural and organic stores such as Whole Foods Market, Trader Joe’s, and Sprouts passed drugstores as the third-highest channel for private label sales.

He added that their survey showed some cautionary tales for private label, as fewer shoppers bought private label than a year ago (78 percent, down from 86 percent), with shoppers saying quality of private label products was down in 10 of 13 categories.

Mintel’s Lynn Dornblaser said in her presentation that private label products had begun to address health and wellness issues that consumers were concerned over, particularly in Europe. But she said she felt like there was room for growth from retailers in those areas.

“Any retailer in the U.S. would be foolish if they don’t talk about where their food comes from,” she said.

Jim Lucas of Schawk addressed the need for retailers to push own brands, gaining ownership of their private label products. And he said value products don’t have to be just about price, but helping shoppers get what matters to them, whether through convenience or price or added features to products.

Jim Wisner discussed digital and social marketing opportunities for retailers in private label, urging retailers to create content and become engaged before big CPG companies push past them directly to the shoppers.

And Daniel Grubbs from IRI discussed the growing bifurcation in the market today, with shoppers moving toward premium and value items, leaving fewer products to grow in the middle, or mainstream, section of stores.

He said that retailers should be cautious of opportunities in categories, but that three-tier strategies in the eight food and non-food categories that IRI studied showed private label growth opportunities.