Six out of 10 shoppers think store brands match the quality of named brands
While store brand penetration rates in US food retail (around 18%) are still well below those of many European countries, US retailers are increasingly recognizing that private label can help them boost profitability, differentiate themselves and improve consumer loyalty, says Packaged Facts.
"Many supermarket chains are in the low teens in terms of private label contribution to overall sales, with announced goals of raising that figure into the 20% to 30% range within the next few years. The Kroger Co., which operates several manufacturing plants that give it an edge in creating private label products for its family of stores, estimates that private label represented approximately 27% of grocery dollar sales and one-third of unit sales in 2012.
"Some chains that specialize in offering private label products have a store brand penetration of approximately 80%, as in the case of Trader Joe’s, or even 90% as with ALDI limited assortment stores."
Loyalty to name brands has slid for the third year in a row
And consumer acceptance levels continue to grow as retailers develop more unique and innovative products in packaging that is giving retailers a real point of difference in the marketplace, says the researcher.
"According to Deloitte’s 2013 American Pantry Study, nearly nine out of 10 (88%) consumers say they have found several store brands that they feel are just as good as national brands, and only 27% say they plan to switch back to national brands if the economy rebounds further, an eight point decline from the previous year.
"At the same time store brands become more entrenched in the pantry, loyalty to name brands has slid for the third year in a row, according to the survey."
