"With budgets strained to the breaking point, shoppers are scrambling for ways to save [image-nocss] money," said IRI Consulting & Innovation president Thom Blischok. "Shoppers are looking through a lens of affordability and have a re-invigorated interest in private label since the economic turmoil began. The need for affordable packaged goods solutions is high, and private-label products are going a long way toward answering that need."
He added, "Since many private-label products are truly becoming mainstream these days, IRI refers to these products as private brands, such as Target's Archer Farms, Safeway's O Organics and Supervalu's Wild Harvest to name a few. The retailer halo is now foundational, and private brands are becoming as familiar and relevant as national brands in some categories."
Private label's strongest growth performance tends to be such categories as cream cheese/spread, paper napkins, refrigerated entrees and shortening and oil, among others, said IRI. Developing categories include pet supplies, cold/allergy/sinus tablets, refrigerated salad/coleslaw and salad dressings.
Drivers behind the highest-performing regions and markets revealed that grocery channel private-label share is highest in the West at 25.2% and lowest in the Northeast at 19.2% for U.S. regions. For individual U.S. markets, Wichita, Kansas had the highest share of private-label unit sales at 34.3% in 2008, and New York City had the lowest at 14.2%.
Four out of five shoppers are now "sold" on private-label quality indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products.
Although nearly 80% of shoppers in 2008 have positive attitudes towards private label versus 73% in 2007, dollar and unit shares are still below 25%.
In personal care categories, branded manufacturers have successfully differentiated themselves in the minds of shoppers, which has made it difficult for retailers to successfully penetrate these categories with private label, IRI said.
Consumers' perception of private-label quality is consistently high across U.S. regions and channels. Some regional variations do exist, which are driven by best-in-class regional retailers.
"The evolution of the U.S. private-label market has accelerated in the face of growing financial turmoil," said Sean Seitzinger, senior vice president of IRI Consulting & Innovation. "As shoppers opt out of some products and stores, they will opt into others. It is critical for the ongoing success of CPG manufacturers and retailers to not only react to, but anticipate these trends and be ready with products, assortments and store layouts that meet the shopper's changing needs."
IRI is a leading provider of consumer, shopper and retail market intelligence and insights supporting consumer packaged goods (CPG), retail and healthcare companies.
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