News

Retailers Plan to Expand Private Label Programs

June 22, 2009
/ Print / Reprints /
ShareMore
/ Text Size+
According to a new report from Troy, Mich.-based Clear Seas Research, a subsidiary of PL Buyer parent company BNP Media, a whopping 91 percent of retailers surveyed in May said they intend to expand their private label offerings over the next several years.


According to a new report from Troy, Mich.-based Clear Seas Research, a subsidiary of PL Buyer parent company BNP Media, a whopping 91 percent of retailers surveyed in May said they intend to expand their private label offerings over the next several years. The largest group - 42 percent - reported plans to increase own brand penetration more than 5 points.

Retailers said the most important reasons for developing a strong private label program were to build customer loyalty (40 percent), to differentiate from their competitors (31 percent) and to earn higher margins (22 percent).

"We’ve all read about a ‘leveling off’ of private label proliferation [post-recession],” said Sarah Corp, executive director of Clear Seas Research's food and packaging division, in an interview with PL Buyer, “but these results suggest otherwise.” She added, “I think it's safe to say that private label isn't going anywhere.”

According to the report, retailers expected to find the best opportunities for short-term growth in center store (29 percent), followed by the refrigerated/frozen (13 percent), natural/organic (12 percent) and upscale/gourmet (10 percent) departments. In addition, almost two-thirds said sustainability initiatives such as greener packaging and local sourcing were either “important” or “very important” in the development of current private label programs.

Over the long haul, respondents seemed to favor a balanced approach to growth. While some thought the best opportunities for private label expansion post-recession were in the national brand equivalent (21 percent), value/economy (10 percent) or upscale/premium (7 percent) tiers, the majority (62 percent) said a combination of all three types of programs would give them the best chance to succeed, according to the report.

Retailers were split with regard to who should bear primary financial responsibility for the development of innovative private label products and packaging, with 48 percent claiming the onus is on the supplier and 45 percent asserting that the burden should be shared, the report noted. Only 7 percent said the retailer alone should absorb those costs.

Not surprisingly, the report continued, most retailers (44 percent) named pricing the biggest challenge in the private label retailer-supplier relationship. Other less-frequently cited issues included timely/complete order fulfillment (17 percent), lack of innovation (16 percent) and lack of packaging options (13 percent).

“Most retailers (53 percent) go it alone in terms of the planning, procurement and/or promotion of private label products, not using or planning to use an outside broker for such purposes,” the report stated. However, it continued, 11 percent are considering such a move.

The report also noted that most retailers (60 percent) currently use 25 or fewer manufacturers to supply their private label program, while 34 percent manufacture some or all of their own private label products.

For more information or to read the report in its entirety, go to http://www.clearseasresearch.com
 -- Denise Leathers

Did you enjoy this article? Click here to subscribe to Private Label Buyer.

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

September 2013 New Non-Food Products

This month’s new non-food products include soft chews for dogs, bottle labeling technology, skin-care products, eyebrow razors, and baby-safe laundry detergent.

Podcasts

Coming with a clear, comprehensive plan was the key to success for Longo Brothers Fruit Markets when the grocer decided to roll out a two-tier private label strategy, Jenny Longo and Robert Koss tell PLBuyer editor Chris Freeman in this podcast.

More Podcasts

THE MAGAZINE

Private Label Buyer Magazine

PLB April 2014 cover

April 2014

The April 2014 issue of Private Label Buyer includes articles on Omnichannel, store brand sauces, and more. Check it out today!

Table Of Contents Subscribe

NBB Private Label Foods

Which factors will drive further awareness—and development—of national-brand-better (NBB) private label foods?
View Results Poll Archive

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

plbuyer superstore logo

STAY CONNECTED

facebook_40px twitter_40px  youtube_40pxlinkedin_40px