Private label purchase trend runs deeper than recession
According to its new report entitled Private Label Perceptions, Usage Patterns, & Intentions, the market researcher found that 97 percent of Americans buy some private label products, making up nearly a quarter (24 percent) of all foods and beverages served in US homes. This is up from 18 percent in 1999, but though NPD said that private label has received a boost from the weakened economy as consumers look to make cutbacks, it added that the trend has been growing for a decade.
Vice president of The NPD Group Harry Balzer said: “This is not just an economic issue…Its importance has been strengthened by the economic weakness but this has been going on for more than a decade. Americans have been watching how they have been spending money on food…Value is always present in our lives.”
NPD said that price and value are the main reasons why consumers choose private label products, but they do not necessarily perceive their quality to be any different from name brand items.
Balzer added: “I’m sure the quality has been worked on by those who are manufacturing store brands.”
Value perception
This echoes a host of earlier market research regarding consumer perception of value for private label goods, from The Nielsen Company, Brandweek and The Hartman Group, all of which have said that value encompasses more than price alone.
The Nielsen Company, for instance, found that that 63 percent of consumers consider the quality of private label brands to be as high as name brand products, and 33 percent said they were better quality.
NPD also found that consumers are open about using private label products. Although 18 percent of store brand goods used in American homes are added to finished products and 26 percent are used as ingredients, 54 percent are the end dish itself.
The results were based on data collected from 2,000 households by monitoring all consumption over a 14-day period.
In terms of whether name brands can hope to compete with private label goods, Balzer said: “This will be the issue that chases manufacturers when we come out of this economy.”
Private label products account for more than $81bn in the US, with health and wellness claims including no trans fats, no saturated fats, multi-grains and antioxidants among the strongest-growing categories.
In the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent, according to the Private Label Manufacturers Association. And in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent.
