The Past, Present and Future of Private Label
By Brett Dworski on Nov. 23, 2020CHICAGO — Private-label products have gained traction in recent years—but how have they performed during the coronavirus pandemic?
During the webinar, the Future of Private Label, the Consumer and CVP, Teresa Voelter, product director of private label for the McLane Co., Temple, Texas, outlines private-label industry trends, shifts in spending and consumer habits, top private-label categories and growth and more.
The webinar is part of Winsight's new Outlook Leadership Community
- Click here to register for Voelter’s on-demand webinar to find her full report and insights.
Here are five quick takeaways from Voelter’s webinar …
C-Store sales trends
While the convenience-store channel has struggled in 2020, the industry is once again on the rise. C-stores experienced 0% category sales growth in March primarily due to store closures and lockdowns across the country, Voelter said; however, the sales have increasingly grown since April—a trend that retailers can “anticipate to keep growing,” she said.
“Convenience stores are showing strong growth,” she said. “Convenience gained market share during 12 of the last 18 quarters and continues to see an upward trend.”
Private-label growth
In 2019, private-label sales totaled nearly $137 billion in c-stores—a 4% increase from the previous year, according to McLane. Unit sales for private label also increased 2.3% across all U.S. outlets during this period.
During the pandemic, however, private label has jumped to a new level. Private-label sales grew nearly 15% during this year’s first quarter, as well as increased 19% and 13% in dollar and unit shares, respectively. McLane estimates private-label sales to reach $183 billion by the end of 2020, Voelter said.
Beyond that, more than 58% of the growth in private label has been driven by non-beverage categories, she said, although sports drinks and bottled water are the top individual drivers. Pizza, batteries, paper towels, cups and plates are also major nonbeverage drivers.
Interest is high
Eighty-two percent of consumers said that private-label products are better value than national products, while 89% said they trust private-label as much or more than national brands, according to McLane. Additionally, 87% of consumers said that the variety offered within private-label is just as good if not better than that of national brands, while 86% said the quality in private-label is just as good if not better.
Consumer behavioral shifts
Past recessionary behavior had shown that consumers shifted to value brands regardless of quality, Voelter said. Consumers also increasingly became cost conscious and less focused on convenience during these periods.
During COVID-19, there’s been decreased brand loyalty among consumers, who are purchasing what’s available on shelves and what meets their needs, Voelter said. C-stores are also seeing increased center-store traffic, since more people are stockpiling pantry items and cooking more at home and purchasing more comfort foods, she said.
“There has been great uncertainty and there’s no way for us to tell what the future holds,” she said. “People are worried about their finances, what store stock levels will be, and a COVID-19 resurgence.”
Future trends
Sixty-five percent of consumers have tried new brands during the pandemic, and this experimentation trend will continue down the line, Voelter said. Because of this, retailers should dedicate more space to a variety of brands and look at how to increasingly offer more value to their customers.
“If their preferred one isn’t there, [customers are] open to trying new brands,” she said.
Additionally, grocery demand in c-stores will continue its hot streak, while e-commerce is here to stay, she said.
“Find a way to join the e-commerce movement and stay relevant, whether it’s working to find a delivery service or utilizing a new e-commerce platform,” she said.