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C-Store Private Brands: 'A Special Hurdle'

Proprietary labels gathered $138 billion across convenience and grocery channels in 2017, but have still fallen behind outside retailers

CHICAGO and ARLINGTON, Va. -- Food and beverage private-label brands are gaining consumers’ trust. Sixty-nine percent of consumers said it’s very or somewhat important to have a good assortment of private brands in these sectors, according to a recent report conducted by research firm IRI and the Food Marketing Institute (FMI). And in the past year alone, specialty brands in the United States have garnered annual sales of $138 billion across convenience-store and grocery channels.

The study, Power of Private Brands, outlines how retailers can effectively tap into consumers’ private-label demands through four lenses: sales data across multiple categories (From the Register), national consumer surveys and social media (From the Consumer), industry attitudes and viewpoints (From the Industry) and global opportunities (From the World).

“Private brands have become full-fledged brands in their own right,” said Doug Baker, vice president of industry relations for FMI. “The research emphasizes the importance of not making assumptions when appealing to demographics and audiences, including how store brands are marketed and positioned. In fact, Generation X is responsible for 31% of all dollars spent on private brands across all outlets, compared to 19% each for older millennials and younger boomers.”

Recent IRI data outside the report also shows that private-label brands have grown in c-stores over the past year. The research firm noted that c-stores sold nearly $54 million worth of private-label potato chips in 2017, and that 81% of consumers said they purchase private-label products on every or almost every shopping trip.

Nonetheless, there’s still work to be done. Retailers outside c-store and grocery channels, such as mass and club operators, have outperformed with private-label brands, according to the report.

“While the news for private brands overall is good, there is a special hurdle for food retailers,” said Mark McKeown, principal of Client Insights for IRI. 

Over the past few years, IRI has conducted a series of steps to uncover why c-stores and supermarkets have fallen behind. These steps included examining the evolution of private brands in tiers and observing how private brands are performing in specific categories.

“This year, we examined the different groups of private brands, including lifestyle (products that cross over categories and departments and deliver a common promise, such as clean label or organic), compared to regular (retailer banner brands that do not deliver a common promise) and how consumers perceived and purchased either.”

Arlington, Va.-based FMI conducts food safety, government affairs, education, research and industry relations programs for retailers and wholesalers. Member companies operate nearly 33,000 retail food stores and 12,000 pharmacies globally.

Chicago-based IRI provides big data, predictive analytics and forward-looking insights for CPG, retailers, financial services, health organizations and media companies. The company works with more than 5,000 clients globally.

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