Photo: RetailWire
A study from Acosta finds that shoppers overwhelmingly prefer national brands and that pushes toward private labels might be undermining their effectiveness.
Overall, shoppers agreed that "name brands are better than store brands" in 41 of 53 categories, including pet food, beauty & personal care, carbonated soft drinks, coffee and chocolate.
Name and store brands were found to be “about the same" in 12 out of 53. These were most likely in the perimeter (dairy, produce, fresh meat, bakery, etc.) as well as paper products and bottled water.
For no category did respondents believe that store brands are better than name brands.
Generally, the more personal, innovative and differentiated the category, the more likely a shopper is to choose a national brand over a private label brand.
The top three reasons consumers gave for purchasing national brands while grocery shopping included:
- "National brand products are higher quality in taste and/or performance."
- "I can get better deals on national brands (through sales/coupons)."
- "I trust national brand products more."
Cost savings was the primary driver of private label brands, and purchases are often viewed as a compromise, the study found.
An accompanying study of over 100 retailers found:
- Retailers need to sell 20 percent more to make up for the trade down from a national brand to a lower-priced private brand to keep revenue steady.
- Fifty-nine percent of private brand items are priced lower than they need to be.
- Over the past four years, private brands have grown assortment, but their strength per item has been diminishing.
Finally, national brands can help grocers offset the challenges presented from the rapid growth of limited-assortment value chains. The biggest drivers to the value channel were found to be best everyday prices (49 percent), better value for their money (47 percent) and cost savings/help within a budget (45 percent). Private brands came in at 23 percent and better-quality products, 17 percent.
John Clevenger, managing director and SVP at Acosta, said in a statement, “A clear takeaway for retailers is that they should understand the different roles national and private brands play."