Store Brands Continue to Rack Up Share Gains

May 9, 2010
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New research from The Nielsen Co., New York, reveals that, while store brands gained share points in two-thirds of 21 European and North American countries examined by the company, advances in the United States last year were even more significant.

According to a May 3 NielsenWire report authored by Todd Hale, senior vice president of Nielsen's Consumer and Shopper Insights group, private label's share of U.S. dollar sales jumped 2.1 points to 17.3 percent in 2009, well above the average 1.3 point gain elsewhere in the world. Still, store brand share in the United States remains short of 24.2 percent average across Europe and North America.

While private label's comparatively strong performance in the U.S. marketplace last year derives partly from its lower share to begin with, Hale told PL Buyer that retailers also deserve much of the credit.

"U.S. retailers focused a great deal of energy and investment behind their store brand initiatives over the past couple of years," he explained. "They entered new categories, focused on both value and premium offerings, invested in consumer research to make sure they were taking the right actions, implemented complete package makeovers and actively promoted and advertised the quality and value of their store brands at [national] brand-quality levels."

However, he continued, private label still has a ways to go in the United States, particularly in certain categories. Although store brands captured 20 percent or more of total unit sales in 48 of 117 categories analyzed by Nielsen, its share of many other categories languished in the single digits.

Although private label does well in commodity categories like milk, eggs and sugar, as well as in those with little consumer perceived differentiation like first aid or wrapping materials, "In categories with a history of strong brand marketing support like beer and candy, or those with a high demonstrated level of innovation such as deodorants and detergents, store brand share remains relatively weak and undeveloped," Hale wrote. "The low-hanging fruit for store brands involves cherry-picking sales at the expense of smaller brands with commensurately smaller marketing support budgets."

Additional opportunities for store brand growth can be realized by narrowing the price gap in infrequently purchased categories "where consumer understanding of price point is not understood as well as in frequently purchased categories," Hale continued. "We also see opportunities for retailers to raise prices of premium store brand items where consumers perceive the item's quality to be at the same level as premium [national] brands in that category."

According to the report, private label-national brand price gaps are most significant in the health and beauty (-76 percent), non-foods (-70 percent), general merchandise (-61 percent) and dairy (-49 percent) departments. Price gaps are smallest in the deli (-22 percent), frozen food (-26 percent) and dry grocery (-44 percent) departments, suggesting retailers have a long way to go before reaching any kind of pricing parity. But even an "almost imperceptible" across-the-board private label price increase of just one cent would yield up to $400 million in incremental unit sales annually, Hale noted.

The report also revealed that the 20 percent of all households classified as "super heavy" store brand buyers in 2008 expanded to represent 22 percent of all households last year. Super heavy buyers purchased almost half (48 percent) of total store brand units last year, up from 46 percent in '08. More apt to be families with multiple mouths to feed, super heavy store brand households accounted for 34 percent of all purchases last year (store and national brands).

"To put super heavy buyer clout into perspective," Hale wrote, "their all-category buying rate is three times that of the super low store brand buying segment, and they deliver twice as many buying occasions as super low store brand buyers."

Retailers that can win those consumers' loyalty to their private labels can drive sales across the store, not just among store brands, Hale said.

Historically, Hale noted, large, middle-income, blue collar households drove a disproportionate percentage of store brand sales. But Nielsen's research revealed that the fastest-growing segment of store brand shoppers is families with annual incomes of $100,000 or more. It also showed that younger female heads of household have a high propensity to shop store brands, despite the fact that national brands often target young people in an effort to secure their loyalty early on.

"With enhanced quality behind store brand launches and low and high income consumers feeling the pinch from this recession, store brands have become an acceptable alternative for more and more consumers," Hale concluded.

For more information, or to read the post in its entirety, visit

- Denise Leathers

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