Brands, private label can work together

20 December 2013
CHICAGO: Private label and national brands can enjoy mutual growth by working together to serve the full range of consumer needs and wants, according to a new report.

Private Label and National Brands: Paving the Path for Growth Together, part of the Times & Trends series from Information Resources Inc (IRI), noted that the market share of private label and national brands had not changed during the past year.

Consumers, it added, are now putting value "in the crosshairs of every purchase decision". IRI argued this "new normal" created opportunities for marketers.

"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," said Susan Viamari, editor of Times & Trends, IRI.

Private label's share was highest in the grocery channel, at 21.9% of unit sales and 18.2% of dollar sales. Grocery also had by far the greatest level of private label penetration, at 96.9%.

Private label growth, however, was most pronounced in the club channel. Store brands attracted $1.4bn more in sales from heavy and light buyers at these stores in 2013 when compared with 2010.

Private label also performed well in the drug channel, as retailers broadened and enhanced their private label programs. Unit share stood at 17.6% and dollar share at 16.9% here. The comparable figures for convenience stores were just 2.4% and 1.7% in turn.

As regards categories, private label's volume share had increased in five of its ten largest segments in the past three years. IRI said this process had yielded an additional $2.6bn in sales in the past year alone.

But national brands had gained ground in the other five top private label categories, increasing the revenue they generated by a combined total of more than $1.7bn. IRI singled out the vitamins category as an area where the volume share of national brands has grown, as they were up by 6.9 points in the past three years.

The emphasis of consumers on value for money means that savvy marketers should focus on deepening penetration and strengthening price and promotion strategies, IRI added.

Viamari argued that a "strategic collaborative marketing partnership" between private label and national brand marketers could help "increase sales and strengthen customer loyalty by getting the right products to the right place at the right time, with a targeted value proposition".

Data sourced from IRI; additional content by Warc staff
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