CHICAGO — Private label is here to stay, according to Information Resources, Inc. (I.R.I.), and it would be in the best interest of both private label and national brand food and beverage marketers to identify ways to coexist and benefit mutually. I.R.I. staked its position on the subject in its latest Times & Trends report “Private label and national brands: Paving the path for growth together.”
“While some industry experts believe private label has ‘had its day,’ I.R.I. believes that private label and national brand marketers can enjoy mutual growth by not simply co-existing, but rather evolving and working together to serve the full spectrum of consumers’ needs and wants,” said Susan Viamari, editor of Times & Trends for I.R.I. “Of course, consumers are shopping conservatively and looking for money-saving options, so they have embraced private label. However, national brands remain critical. In this environment, manufacturers and retailers must work together to provide a balanced assortment of national and private label solutions, targeted at the store level, to offer the best overarching value.”
The market research firm said private label sales inched up slightly during 2013 when compared to 2012. But despite the fact the market appears to be holding steady, there has been category movement within specific retail channels. Private label performance within the drug channel, for example, has been strong during the past year. Unit share grew one point, to 17.6%, while dollar share climbed less sharply, to 16.9%. Though private label share inched up slightly in the convenience channel during the same time period, it remains well below industry average, at 2.4% and 1.7%, respectively.
Private label’s strength across the drug and convenience channels is attributable to a number of factors, including retailer efforts to broaden and enhance private label programs, according to I.R.I.
The club channel is demonstrating the strongest private label share growth —growth that is occurring across both heavy and light purchasers of private label products. The growth brought the channel nearly $1.4 billion more in private label sales from heavy and light buyers in 2013 compared with 2010.
In the coming months and years, consumers will continue to look to both national brands and private label solutions to find the best value, according to I.R.I. To deliver, marketers from both sides must focus on one or more growth strategies, including deepening penetration, fracturing concentration and strengthening of price and promotion strategies.
“Private label is clearly here to stay,” Ms. Viamari said. “For private label to prosper, it is critical for private label marketers to understand the role of their brands in relation to competing national brands. And, national and private brand marketers must step up their collaborative focus, directing their efforts to retailer/manufacturer partners that ‘best fit’ their strategic goals and objectives.
“This type of strategic collaborative marketing partnership will increase sales and strengthen customer loyalty by getting the right products to the right place at the right time, with a targeted value proposition.”