Brand Loyalty Declines Amid Supply Woes and Higher Costs

90% of consumers will buy another brand or item if they can’t purchase their preferred choice.

March 30, 2022

Empty Shelves

ALEXANDRIA, Va.—Brand loyalty is decreasing among consumers as shoppers try to balance products they can afford and what’s actually available, reports the Wall Street Journal. A survey found that about 70% of U.S. shoppers purchased a new or different brand than they had pre-pandemic.

Industry executives say that brand names risk losing market share to private-label brands that are more readily able to fill in empty spots in store aisles. Because of product shortages, grocery stores are able to leverage more with major brands and test newer, often lower-cost products, says the Journal.

IRI found that brands with low availability, or in-stock rates of between 72% and 85%, have lost 0.7 percentage point of share of wallet, or brand loyalty, on average, and 90% of consumers will buy another brand or item if they can’t purchase their preferred choice, indicates a survey conducted by 84.51 LLC, a data analysis business of Kroger Co.

Even before the pandemic, supply chain woes and labor shortages forced companies to raise prices, and retailers were stepping up their private-label product game to ensure that the products are on par with brand-name products, while still keeping prices down.

Historically, private-label brands thrive when inflation rises and there is economic uncertainty. During high inflation in the 1970s, private labels grew more prominent as cost-effective substitutes to name-brand products, and in 2008, store-label brands excelled, according to a 2008 New York Times article.

Convenience stores have been getting in on the private-label game for some time. 7-Eleven launched its first private-label brand 7-Select in 2008, and in 2019, the company launched 24/7 Life, with total private-label selection at 1,500 products. According to 7-Eleven, about 8 out of every 10 Americans buy private-brand products to save money, NACS Magazine reported in “Private Matters” in the April 2021 issue. Millennials have a particular affinity for the value and quality that the brands offer, the chain said, and are contributing to the growing popularity of retailer brands.

Foxtrot says its specialty is its private labels, and the company says it’s “investing in a deeper private label assortment around meal-times.” Since introducing private label products one year ago, the assortment of Foxtrot-branded and -created labels now account for nearly 30% of all retail offerings and nearly half of all brick-and-mortar and online sales.

Gopuff, a virtual on-demand convenience store, launched private-label products under the brand name Basically, starting with snack, household products and health and wellness products.

A category deep dive at the 2022 NACS State of the Industry Summit, which will take place April 12-14 at the Hyatt Regency O’Hare, Chicago, will cover private-label performance in the convenience retail channel. Hear from Kristine Modugno, director of category management at Nouria Energy Corporation, who will lead the session. Register for the SOI Summit today.