Thrifty Consumers Turn to Store Brands
More consumers are choosing store-brand goods over pricey, name-brand products—another consequence of the recession—which is good news for the manufacturers who produce them, according to a recent report by Chicago-based market research firm Information Resources (IRI).
Store brands' market share has risen to 17.5 percent over the past two years after hovering around 16 percent for over a decade. "This is significant because you're looking at a global, $300 billion-consumer packaged goods industry," says Brent Baarda, director of consulting and innovation at IRI.
But while the recession is driving consumers to sample private label offerings, they're finding they like what they taste. Of 1,500 surveyed consumers, IRI found nearly 80 percent had positive attitudes toward store brands, versus 73 percent a year ago. Four out of five consumers surveyed believe store brands are just as high-quality as a brand name. "The spike will be sustainable, because consumers are having positive experiences," Baarda says.
Roger Hoffman, president and CEO of Food Swing, a Northumberland, Penn.-based independently-held, private-label manufacturer, credits the value proposition and retailers' greater attention to branding, packaging, and marketing.
"Private labels sell less expensively than national brands," he says. "Retailers are also treating their private label as a brand. The days of the generic brown box with lousy marketing are over."
Hoffman is convinced that once consumers give private label a try—whether because of tight budgets or persuasive marketing—there's no reason they'll go back to the brand names.