Are own brands bought because they're cheaper, or because they're better?

CHICAGO — It appears consumers are rewarding those retailers who have placed an emphasis on promoting quality in addition to value as part of their private label offerings. In fact, just under 74% of Americans report they believe store brand products are a good alternative to name brands, suggesting "own brand" programs that are equally differentiated by experience as by pricepoint are finally closing any perceived quality gap between national brands, a recent Nielsen report revealed.

The proof is in the cash register. "Private-label products have posted a compounded annual growth rate of 1.7% over the past four years, ahead of the 1.4% posted by branded products," Chris Morley, president, FMCG and retail, Nielsen, wrote in the second installment of Nielsen's "Total Consumer Report." "The difference is even greater over the past year: private-label gained 0.7% in sales, while branded products decreased 0.3%."

"The difference is even greater over the past year: private-label gained 0.7% in sales, while branded products decreased 0.3%.”

And that may explain why purchasing trends contradict the common perception that lower-income households are most likely to gravitate toward store brands. "In fact, only 10.8% of U.S. consumers in households that earn more than $100,000 per year believe that private-label brands are 'really meant for people who are on tight budgets and can’t afford the best brands,'" Morley noted. "Comparatively, almost 21% of consumers in the under $20,000 per year bracket agree with this statement."

Morley also identified a white space opportunity for retailers promoting their own brands to a diversified consumer base - ethnic groups. "Familiarity and comfort with store brands also varies by ethnicity," he wrote. "Compared with the overall U.S. population, for example, African-Americans, Asian-Americans and Hispanics are more likely to avoid store brands (24%, 82% and 25% more, respectively) simply because they’re not familiar with them," Morley added. "The data pertaining to ethnic preferences highlights an opportunity to educate certain consumers groups about the quality and availability of store brands."




 

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