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- RESEARCH & AWARDS
The great recession - receding but still visible in the rear-view mirror - wrought major changes in consumer attitudes and grocery buying habits. Private label is by far the biggest winner in the transformed landscape, say results of a just-released survey report, “The 2010 American Pantry Study,” from Deloitte KnowledgeCo LLC, New York, and Harrison Group, Waterbury, Conn.
"It’s a confluence of events with the recession being the main catalyst,” Pat Conroy, vice chairman,
Consider the following:
- 80 percent of respondents believe most store brands are manufactured by traditional national brands
- 74 percent say they are more open today to trying private-label store brands than two years ago
- Only 48 percent perceive traditional branded products to be superior in quality to store brands
- Only 35 percent intend to purchase more national brands instead of store brands as the economy improves
- Only 32 percent feel they sacrifice by purchasing a store brand instead of a national brand
The study’s authors see the new marketplace as one in which consumers and marketers do battle over “surplus margins,” where surplus margin is the difference between the regular price and the discounted effective price. Businesses will chase these dollars with tactics that remain market-share driven, advertising based, and point-of-purchase promotion oriented.
The report goes on to say that brands are losing their sway, and the consumer’s willingness to switch has led to private label brands providing not only the price reference point, but a measure of acceptable quality as well.
“This isn’t the end of the national brands. But this is the new normal,” Conroy says. “It will put pressure on national brands to differentiate their products. Transparency in terms of consumers’ ability to judge product claims is increasing and if shoppers see a significant price differential they are more apt to ask, ‘what’s different to justify that differential?’”
Conroy sees today’s consumers distinguishing among three types of brands. The most desirable is a “destination brand” – one purchased regardless of channel, and relatively indifferent as to price. Then there is the “sale-only brand” where the consumer waits to purchase for a sale, coupon or promotion. In the middle are preferred brands that the consumer wants to buy but “won’t go out of their way for.”
“We find today that there are less than a handful of destination brands,” Conroy says. “This is very different than two or three years ago. We believe private label acceptance will continue to grow. And it’s no surprise that private label quality has continued to improve. We’ve seen private label brands that have ascended to national prominence. We don’t see this abating. It will be interesting to see how the national brands react.”
For more information on the study, go to www.deloitte.com