Consumer perception of private label improving
August 26, 2009
by Keith Nunes
CHICAGO — Consumer perception about the quality of private label products is improving among both lower- and higher-income consumers, according to market trends researcher Information Resources, Inc. A new study from I.R.I. noted that 78% of lower- and higher-income consumers consider private label products to be of "excellent quality."
"Four out of five shoppers are now ‘sold’ on private label quality indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products," said Sean Seitzinger, senior vice-president of consulting and innovation for I.R.I. "However, branded manufacturers still have key advantages in the strong emotional connections between their brands and their loyal customers. For instance, personal care products have successfully differentiated themselves in the minds of shoppers."
Consumers throughout all income levels and age groups told I.R.I. that variety is an important factor when buying private label, with 65% preferring retailers that offer a high level of private label variety. The result has increased five points since late 2007. The research firm’s data indicate that retailers need to consider variety in terms of products and packaging within a category, and processors should be thinking about how to expand the expectations that consumers have for choice within a category.
On a regional basis, grocery channel private label shares are highest in the West, excluding California, and lowest in the Northeast. At the individual market level, shares range from highest in Wichita, Kas., (35.4%), and lowest in New York City (14.5%). The average share for the total United States is 22.4%, according to I.R.I.
At the retailer level, The Kroger Co.’s Dillon division has the highest private label share at 35.5%, and The Great Atlantic & Pacific Tea Company, Inc.’s Food Emporium has the lowest at 10.1%. This wide spread illustrates the major differences in store brand emphasis and development across the United States, according to I.R.I. Most grocery store retailers have successfully grown their private label share since 2007, such as Wegmans in the Northeast, which has enjoyed an increase of 3.8 share points.