Private label boosts US market share

22 April 2009

NEW YORK: Private label brands have increased their market share in the US by 2% between March 2007 and February this year, as the economic downturn leads consumers to trade down to cheaper alternatives, reports The Nielsen Company.

The advance of store brands is argued to be one of the defining features of both this and previous recessions, and major American retailers including Wal-Mart have recently moved to enhance their in-house offerings.

While own-label held a market share averaging out at around 15% from early 2004 to March 2007, Nielsen found that rising commodity prices, followed by the onset of the financial crisis, have resulted in a rapid upturn in sales.

As such, store brand revenues have increased by 10% to $84.4 billion (€65.3bn; £57.9bn) in the categories tracked by the company, which says growing numbers of shoppers "are replacing their branded products with private label equivalents."

Retailers are also developing premium and low-cost products in order to "differentiate themselves," and it seems likely many "private label switchers won't be coming back when the economy improves" without incentives to do so.

Brand owners are expected to adopt a variety of strategies in response, such as increasing their focus on "health and wellness", new packaging and line extensions, as well as launching "advertising in new places to get the message across to consumers."

A separate study by Nielsen and The Hallmark Channel has also found that "baby boomers" are responsible for over half of sales in 80% of consumer packaged goods categories, making this segment worth $200bn to this sector alone.

Data sourced from The Nielsen Company; additional content by WARC staff