SymphonyIRI Group Reports Cite Strength of Store Brands

New research provides an in-depth look at key drivers, trends and attitudes.

July 23, 2010

CHICAGO - Nearly every household in the United States purchases store brands today, and 80 percent of consumers believe store brand products are equal or superior to national brands in terms of quality, value and packaging. These are just two statistics that demonstrate the remarkable strength of store brands. Retailers have introduced sophisticated strategies to build store brand dollar and unit share growth, while national brand manufacturers have responded with aggressive new marketing strategies of their own.

SymphonyIRI Group Inc. announced the availability of two new reports that analyze the dynamics of today??s store brands market. "Understanding and Mitigating the Private Label Threat" provides a detailed perspective on the store brands market and is tailored for national brand manufacturers. "Store Brands: More Than Just a Safe Harbor in Turbulent Times," provides manufacturers and retailers insight into current and emerging store brand trends as well as influencing factors that are helping to define the CPG industry of tomorrow. Information from these reports is designed to assist marketers as they develop their product, pricing, merchandising and promotion strategies moving forward.

"Store brands growth galloped during the recession as shoppers revised their definition of value to be much more focused on price," said Sean Seitzinger, senior vice president, Consulting & Innovation, SymphonyIRI. "Today, growth continues at albeit a slower pace as the economy recovers, but store brands are here to stay and are gaining in importance. As retailers accelerate investment in aggressive assortment, product and promotion strategies, we expect store brands to play a critical role in offering value and differentiation."

Among the principal findings of these new reports:

  • Dollar and unit share each grew 0.2 share points, to 18.3 percent and 23.1 percent, respectively, in 2010 over 2009; contrasting with growth of 1 point and 1.3 points in 2009 over 2008.
  • Dollar and convenience stores enjoyed the most rapid unit share growth of 1.1 points and 0.9 points, respectively.
  • The health-care department witnessed the most significant store brand growth in both dollar and unit share of 2.6 points and 1.7 points, respectively.
  • On average, store brands offer a savings of 30.5 percent as compared to national brands, but average price gap varies widely across departments. These savings range from as low as 7 percent in fresh/perishable products to nearly 61 percent in beauty and personal care products.
  • Store brand sales tend to be more concentrated versus the CPG industry as a whole. One-third of shoppers account for 62 percent of store brand sales, and the top 50 categories of store brand products account for more than two-thirds of store brand sales, versus 59 percent for the CPG industry as a whole.

Both reports outline important strategies for manufacturers to consider, among these:

  • Continually identify and assess brand-specific opportunities, such as optimal price gaps versus store brands and means to protect and grow share in categories where there is a strong store brand presence through value-oriented promotions.
  • On an ongoing basis, redefine pricing strategies to ensure alignment against the needs of key consumer segments, invest in product, packaging and promotion innovation across key categories, and implement highly-targeted and affordability-oriented marketing campaigns where store brands exhibit the greatest threat.
  • Implement metrics to monitor actual versus planned impact of store-brand related initiatives.

In addition, the "Understanding and Mitigating the Private Label Threat" research includes a section devoted to specific-store brand mitigation strategies as well as provides multiple case histories.

The Times & Trends report also offers a section on recommended retailer strategies, which include:

  • Continue to understand core shopper needs and align new product strategies accordingly; tailor offering at the market level, while supporting store brands with consumer-centric and highly integrated marketing campaigns.
  • Evaluate feasibility of multi-tier offerings across key categories and product lines, review pricing strategies to ensure alignment with store goals and analyze product development best practices across departments to identify low-cost innovation opportunities.
  • As with manufacturers, retailers should test market product, pricing and promotional changes before and after rollout as well as track/benchmark store-level brand share shifts relative to national brands.

Download the special report.

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