Private Label, Part 1: Nuanced Efforts, Complex Growth

"In recent months and years, many retailers have innovated very successfully to create private label offerings with different pricing strategies to attract shoppers of varying income levels, invested in developing products for categories heretofore dominated by national brands, and introduced private label products for hundreds of staple products to ensure a private label offering for many basic needs," observes John McIndoe, Senior Vice President of Marketing, SymphonyIRI Group.

Mr. McIndoe's astute remarks exemplify the evolving state of private label in the U.S., as detailed in SymphonyIRI's newly released report: Private Label - Brand Positioning in the New World Order. In the last decade, domestic retailers have both taken lessons from successful European chains, such as Tesco and Waitrose, and further refined their own strategies that are more characteristically American.

Currently at 22.9 percent, private label share of CPG unit sales dipped during the past year, the first decline since the beginning of the economic downturn. Despite that fact, private label is still winning share in nearly three-quarters of the top 100 CPG categories.

SymphonyIRI's recent Private Label 2011 report clearly illustrates the fact that consumer perceptions around quality and value of private label food and beverage solutions are quite favorable.

However, perceptions clearly vary across categories and across consumer segments. For instance, HispanicLink, a new study detailingthe shopping preferences and motivational drivers of behavior among Hispanics, examines 15 CPG categories, and finds that in some categories, Hispanics -- particularly acculturated Hispanics -- view private label as much better than national brands, while in other segments, the difference is smaller or non-existent.

In general, though, favorable perceptions are helping to sustain and strengthen private label performance across most edibles departments. And for most of these, private label traction has actually been stronger versus national average fairly consistently during the past year.

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