Do retailers need a new approach to store brand marketing?
We’ve all heard about the impact Millennials are having on retailing and we all know Baby Boomers are still a generation of economic consequence, but what about Gen X? Well, it turns out this group — born between the early 1960s and 1980s — was hardest hit of all generations by the Great Recession and has spent much of the last decade learning how to be thrifty. That includes looking for value, specifically store brands, when the quality meets their other shopping requirements, making Gen Xers a great opportunity for retailers.
Speakers at the 2017 Private Label Manufacturers Association (PLMA) conference held in Chicago this week described several other opportunities for retailers and their store brand suppliers in the next five years. Nielsen reports that more than one of every five items sold in the country’s supermarkets in 2016 was a store brand and Kantar Retail predicts that private label growth between now and 2022 will outpace the previous five years.
The reasons for the growth include not only the changing demographics and economy, which are having a huge impact, but also improved product quality and packaging, increased promotion and enhanced curation of the assortment. The overall shift in shopper perceptions of private label brands and the value they offer is also helping retailers drive sales and capture market share.
So, what can retailers do to capture more of the private label pie and build up their own brand? Industry consultant Jim Wisner says, “Store brands need to be promoted or they won’t grow. Less than 20 percent of the categories get the support for store brands comparable to national brands and that’s not enough.”
PLMA estimates that about $150 billion worth of store brands were sold last year and that shoppers save $30 billion annually by choosing store brands. These figures alone should give retailers the impetus to devote resources to the sector in a big way.
DISCUSSION QUESTIONS: What are retailers doing right in promoting store brands what could they do better? Which are doing the best job?