PLMA surveyed almost 1,000 Gen Z US consumers to survey their perceptions on private-label store brands and how and what they want, Westbury said. Overall, Gen Z consumers held a positive view of private-label brands, and they sought them out for several reasons, she added.
In the report, 67% of Gen Z consumers said they were extremely or very aware of store brands, and 64% said they buy store brands always or frequently, Williams shared. Additionally, 56% of Gen Z consumers are extremely or likely to buy store brands to find the “best value,” and 51% always or frequently choose a place to shop because of their store brands.
When asked to describe store brands, 53% said that 'valuable' described store brands 'precisely' or 'very much,' 52% said private label brands were reliable, and 50% said 'variety' best describes them, PLMA shared.
Gen Z consumers aren’t a monolith
PLMA broke the survey respondents into four groups based on their support of private-label brands to further understand Gen Z consumers' relation to private labels, including expressive loyalists, (the consumers with the highest opinion and purchase rates of private-label products), functional loyalists, optimistic moderates, and discerning reluctants (those who don’t want to engage with private-label at all), which represented, 23%, 24%, 31%, and 22% of all survey respondents, respectively.
“When it comes to the expressive loyalists, 95% of them would say they're highly aware of the store brands at their favorite grocery, and 82% of them frequently or always purchased store brands during their regular shopping, 77% of them frequently are always choose retailers due to the store-brand offering, and 75% or more of them believe the words trustworthy, credible, [and] quality are strong descriptors of the store brands.”
Expressive loyalistists also look for private-label products that represent their values, similar to how they assess named brands. Most expressive loyalists (73%) said that store brands should reflect their values.
“Gone are the days that we simply use a brand logo as a signal that this is the store brand cost leader alternative. Instead they are looking for brands that stand for something," Williams said. "It's important to get to know Gen Z, and what they care about and find ways to show them that you care about that as well.”
Stuck in the middle: Functional loyalists and optimistic moderates
Functional loyalists are the “traditional value shopper” and want low priced products that meet their needs, Williams explained.
“Basically, these customers — 25% of the Gen Z segment — are going to buy store brands for the value — no frills, no fluff. So, what we can do is stop worrying about delighting them in this space, make sure that the value is there, and then we can take that revenue that we draw from functional loyalists and invest in innovation for those expressive loyalists who care so much about a great positioning strategy.”
The optimistic moderates "don't feel negatively about store brands ... [but] they're just not the expressive or functional loyalists, yet," she said. Overall, this cohort has positive associations with private label, and 57% said they were aware of store brands, 53% frequently or always purchase them, and 55% believe 'reliable' describes private-label products, she added.
While optimistic moderates aren’t as engaged with private-label brands, social media and other tools can be a way to educate consumers about private-label offerings and get them to have higher degrees of loyalty to private-label brands.
“They are the least likely to be the primary grocery shopper in the household and the least likely to be the primary meal-preparation person in the household. So, the optimistic moderates are coming into their own independence, moving out into the world, and what we think about the optimistic moderates is a pretty good proportion of the segment is going to become a functional or an expressive loyalty standpoint at some point."
Should private-label brands try to convert the discerning reluctants?
The consumers least engaged with private labels, the discerning reluctant, “are the least aware of store brands,” and “they are more likely to describe store brands as cheap [rather than] trustworthy or quality or reliable,” Williams said.
She advised retailers focus on how to better address the needs of the three other categories.
“Do we need to invest in every segment of the population in terms of our store-brand strategies? No. Sometimes, we have to say which of these segments would be the most profitable, the most advantageous for us to focus on, and let's create a marketing mix for them. We can't win everyone over. So, the discerning reluctants maybe that population that we don't worry too much about right now.”