Private Label Builds Shopper Loyalty
According to a 2016 Nielsen/PLMA private label study, sales of private label products generated a record $120 billion last year, and continued to outpace national brands. The study further showed that unit share in supermarkets held steady at 22% of unit sales and accounted for nearly one out of four products sold.
Private label sales have historically been associated with economic hard times and pricing pressures. This is not the case today where according to an IRI report, more than 90% of consumers found private label products to be as good as branded products, and nearly 40% believed private label to be of higher quality. The PLMA study further pointed out that shoppers saved about $44 billion a year by buying store brand/private label products. Millennial shoppers, specifically, have even less affinity toward branded products. For the supermarket retailer, private label is a source of differentiation in a highly competitive marketplace as well as a source for increased profit potential.
As a Topco private label member, we have seen firsthand the upward trend and expansion of private label products. Today, our private label program includes over 2000 HBW and GM items in over 40 non-food categories with profit margins to our retailers that exceed their national counterparts by 10-25%. Internal analgesics, allergy, cough and cold products lead the way in the HBW category while stationery, school supplies and pet care are the top sellers in GM.
In in the HBW category, we recommend placing private label product next to branded product to offer shoppers a choice. Private label items are further enhanced by using a “compare n save” shelf talker showing the savings. As some shoppers have strong brand preferences, a balanced assortment requires co-existence between private label and national brands.
Private label will continue to build customer loyalty in supermarkets as it continues to grow with product innovation and communicates its value and affordability. Focusing on health and wellness, as well as sustainable sourcing and packaging will extend this loyalty across diverse consumer populations.