NEW YORK: Half of US consumers believe the quality of own-label household goods is equal to that of national brands, a study has indicated.
AlixPartners, the consultancy, surveyed 1,000 adults and revealed 50% agreed private label items in this sector could match premium alternatives concerning overall standards.
Equally, 70% were focusing solely on price when making category purchases, while 50% intended to reduce their total expenditure.
Participants found it most challenging to differentiate between private label cleaning products and more established options.
Moreover, 72% of consumers said they based their cleaning product choices on price considerations - the highest for any segment measured for the report.
Cost was the defining factor for 70% of shoppers picking up paper products and 65% for kitchenware.
Elsewhere, nearly 65% of panellists underestimated the savings provided by store brands measured against competitors from organisations like Reckitt Benckiser and Procter & Gamble.
"We're seeing household products and brands are not immune from the big reset of consumer spending priorities taking place throughout today's sluggish, uncertain economy," said David Garfield, head of AlixPartners consumer products practice.
A further obstacle brand owners must overcome is the inventory disadvantage now observable when compared with other North American FMCG groups.
The biggest operators in the sector typically also have a profit margin 1,500 basis points greater than small to mid-sized rivals.
"All household products companies face the vagaries of this sluggish economy and the possible watering-down of their brands," said John Fuller, a director at AlixPartners.
"Smaller companies have one thing going for them - they're usually more nimble than larger companies ... If they can use this to at least get 'close' on costs while building a strong growth strategy, they have a chance against larger competitors."
The trends identified by AlixPartners might extend across industries, as Planet Retail has predicted own-label sales in the 30 main US grocery chains will rise 40%, to $209bn (€160bn; £134bn), by 2014, a 24.1% share.
Natalie Berg, director of global research at Planet Retail, suggested Wal-Mart's Great Value line stands to gain particularly substantial benefits.
"The relaunch of the Great Value private label, combined with the effects of its SKU rationalisation programme, has led to improved visibility of private label, resulting in an increase in category sales," she said.
"In the US, the Great Value line alone generates $12.5bn in sales. We expect Great Value to become $20bn brand by 2014."
Aldi, a discount chain where national brands currently deliver less than 15% of returns, should also generate $15bn in revenues by 2014.
Data sourced from AlixPartners/ImagesFood; additional content by Warc staff