Own label products to remain strong

11 July 2012

NEW YORK: Own label lines make up at least half of the grocery purchases of a majority of US shoppers, and look set to retain their position even if the economy improves, a report has suggested.

Accenture, the consultancy, surveyed 500 adults across the US, some 64% of which agreed that 50% or more of the items in their grocery baskets were store brands.

Indeed, 39% of interviewees had increased the number of these products they acquired in the last few years due to the challenging financial climate.

A 77% share of respondents also reported that they would not cut back on private label goods should their disposable income rates return to the level recorded before the downturn.

Precisely 66% of participants generally selected these lines because they were cheaper than national brands, demonstrating the continuing importance of price.

"Uncertain economic times are a major factor in the growth of own label, but it is the increased sophistication of stores' own brands that has helped them retain customers," said Bob Berkey, of Accenture's consumer goods and services practice.

Additionally, 50% of the panel concurred that such offerings matched better-known alternatives in terms of quality; 42% trusted retail brands; and 28% preferred them.

Further, just 9% of the sample avoided purchasing retailer-manufactured goods because they were inferior when it came to quality or taste.

Moreover, 48% of people questioned thought retailers had enhanced the variety and appeal of in-house ranges, and 36% now perceived them as "simply another brand on the shelf".

However, 87% of those polled would choose branded goods if they were available at the same price as the equivalent private label option, and 51% stated that only a permanent markdown could yield such a switch.

"Consumer goods companies must develop a balanced strategy of collaboration with retailers in some areas and competition in others. This new dynamic - where competitors become partners - will require a considered focus from manufacturers," Berkey said.

"Extreme competition between retailers and consumer goods companies can result in inefficiencies and waste for manufacturers and retailers, and undifferentiated products for the consumer."

Data sourced from Accenture; additional content by Warc staff