Private-Label Perception Rises

Consumers see house brands as good alternative, willing to pay more

SCHAUMBURG, Ill. -- Once considered a lower-price, lower-quality substitute for name brands, private-label products, or store brands, are now viewed positively by the majority of U.S. consumers, according to a new survey by The Nielsen Co. Nearly three-quarters (72%) of consumers believe store brands are good alternatives to name brands and 62% of consumers report they consider store brands to be as good as name brands, up three points since 2005. Private-label products account for more than $81 billion in the United States, up 10.2% over the past year.

Nielsen's survey [image-nocss] indicates that an improved sense of quality is likely a driving factor for consumers' positive attitude toward private-label products; 63% of consumers believe that the private-label brand quality is as good as name brands and one-third (33%) of consumers tell Nielsen they consider some store brands are higher quality than name brands.

"While private-label products continue to follow the success of consumer packaged goods (CPG) manufacturers' name brand introductions, more CPG retailers are making private label a priority with messages on quality as strong as messages on value," said Todd Hale, senior vice president of consumer and shopper insights for The Nielsen Co., Schaumburg, Ill.

Granted, some consumers view store brands less than positively- 16% of respondents maintain that store brands are not suitable when quality matters and 16% say store brands have "cheap-looking" packaging.

According to Nielsen's survey, price and value are paramount; 74% of consumers believe it is important to get the best price on a product. Two-thirds (67%) of consumers agree that store brands usually provide "extremely good value" for the money while 35% of consumers are willing to pay the same or more for store brands if they like it. Just under a quarter (24%) of consumers believe that name brand products are worth the extra price.

"In today's economy, consumers are looking for ways to save money and for many of them, that means taking a new look at private-label products," said Hale. "With more retailers offering satisfaction guarantees on private-label purchases and even serving up blind taste testing and trial programs, consumers' exposure to private-label products has never been greater," said Hale.

Earlier analysis by Nielsen shows that an increase in private-label dollar sales is driven primarily by rising commodity and food prices, particularly in staple categories that are dominated by private-label brands and not in unit sales; however, a recent uptick in private-label unit sales suggests that budget-conscious consumers may be starting to shift away from some established brands in search of better deals. Private label represents 16% of dollar sales and 21% of unit sales, indicating that branded products still capture the lion's share of product category sales.

"Private-label development varies greatly by department, and we see strongest growth in products where private label has historically been strong," said Hale. "Translating private-label growth outside of commodity categories requires innovation, an area where CPG manufacturers, rather than retailers, traditionally excel."Click herefor more coverage of private label.