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About one year ago, IRI predicted that private label in the United States had hit a proverbial glass ceiling. This prediction has proven true, at least at a macro level. Macro-level private label trends, however, paint only part of the private label landscape. At a more micro level, the industry is demonstrating interesting evolutionary changes. ConAgra, for instance, has long been a manufacturer of national brands, but recently completed the acquisition of a private label manufacturer, Ralcorp, and is now looking at opportunities to grow both national and private brand segments of the business through new product innovation, broader promotional programs and streamlined distribution systems. ConAgra expects that this balanced approach will enable them to address the full range of customer and consumer requirements and adapt to the changing demands of the food industry. Meanwhile, national and regional brand marketers are focusing on protecting and growing their share of market through new product innovation, strategic pricing and promotion programs and a variety of other programs designed to keep shoppers asking for more.
Private label performance within the drug channel has been quite strong during the past year. Unit share grew one full 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 relative strength across the drug and convenience channels is attributable to a number of factors, including retailer efforts to broaden and enhance private label programs, which are detailed throughout this report. These efforts have been well timed, for consumers remain locked in conservative purchase behaviors that were initially adopted earlier in the economic downturn. Private label plays a key role in consumers’ money-saving efforts, as evidenced by the fact that one-third of consumers are actively seeking out private label solutions to save money, and 10% of grocery list makers are listing specific private label products to buy before even entering the retail environment—roughly the same prevalence that existed at the depths of The Great Recession.
Private label share is highest in the grocery channel, at 21.9% of unit sales and 18.2% of dollar sales. Despite the fact that the private label landscape has become more crowded and more competitive, grocers have done a commendable job of protecting share. In fact, private label now accounts for almost 40% of products sold through Ahold’s Stop & Shop banner, and the retailer offers a broad array of solutions, including a standard tier line (simply known as Stop & Shop), a natural/organic line (Nature’s Promise), an upscale snack line (Simply Enjoy) and a value line (Guaranteed Value).
In fact, private label now accounts for almost 40% of products sold through Ahold’s Stop & Shop banner, and the retailer offers a broad array of solutions, including a standard tier line (simply known as Stop & Shop), a natural/organic line (Nature’s Promise), an upscale snack line (Simply Enjoy) and a value line (Guaranteed Value) private label products are, in their own right, true brands, and a growing number of these lines have their own dedicated teams that focus on all stages of marketing, from product innovation to distribution. Balancing the assortment of private and national brand offerings at the category level, and then constantly measuring price gap to ensure consumers are getting the value they expect, is absolutely critical. Achieving and maintaining this delicate balance will require a very granular approach, for the value equation looks different for each and every consumer.
Attributed to “IRI, a Chicago-based market research firm (@iriworldwide)”.