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12/01/2012

Pulse report: National Brands Rally Versus Private Label

Though they remain important to retailers, private label products' share growth appears to have hit a glass ceiling in the United States.

Daniel Grubbs,
Principal, Symphony Consulting, SymphonyIRI Group

According to SymphonyIRI Group's report, "Reversal of Fortune: National Brands Pick Up Gains on Private Label," the private label segment has entered a phase characterized by pockets of growth among certain categories, channels and retailer banners, rather than a general expansion.

The fact remains, however, that 47 percent of consumers buy more private label today than before the economic turndown began, and one-in-three shoppers actively searches for store brands to save money, according to the report.

Though success often depends on price, private label is more than just a value play. Retailers and private label manufacturers have invested heavily in innovation, package design and merchandising support to develop "own brands" that are not only viable national brand alternatives, but also true brands in their own right.

That said, private label unit share declined for the second consecutive year, coming in at 17.1 percent in 2012. Additionally, between 2010 and 2012 private label penetration decreased in every measured channel, except club. Conversely, during the same time period, national brands gained share in 40 of the largest 100 CPG categories.

To continue building momentum, national brands must ensure that their five Ps–product, price, promotion, packaging and placement–are properly aligned with the needs of their retail partners.

Private label and national brands must co-exist in the retail environment, which means each must bring creativity and variety to the CPG mix and provide perceptual and real value for shoppers with tightly constrained budgets and seemingly limitless options.


Where is the Opportunity?

Private label volume share is increasing across 60 of the largest 100 CPG categories. To encourage growth across many of these categories, retailers are developing programs to raise awareness of private label lines and usage ideas, encourage trial and elevate buy rate.

Top Categories with Below Average and Increasing Private Label Share
2012 vs 2010: Multi-Outlet + Convenience

Note: Multi-Outlet (Supermarkets, Drugstores, Mass Market Retailers, Military Commissaries and Select Club & Dollar Retail Chains) and Convenience Stores.
Source: SymphonyIRI Market Advantage™; 52 weeks ending 9/9/2012 and same period prior years; Top 100 Categories, Based on Dollar Sales


TIP: Expand store brand offerings in a way that supports your broader overall branding story.

Slowing growth

Private label share of CPG dollar sales increased slightly during the past year, but gains were largely driven by inflationary pricing trends. Private label unit sales declined for the second consecutive year despite the fact that 47 percent of consumers are buying more private label today than when the economic downturn began.

Private Label Share of CPG Spending: Total U.S.
(Multi-Outlet + Convenience)

Note: Multi-outlet includes supermarkets, drug stores, mass market retailers, military commissaries and select club and dollar retail chains.
Source: SymphonyIRI Market Advantage™; 52 weeks ending 9/9/2012 and same period prior years


Grocery Stays Strong

In the grocery channel, private label is enjoying above-average and growing share, supported by ongoing efforts to strengthen the value proposition and amp up promotional support. Meanwhile, national brands gained steam in the drug and convenience channels.

Private Label Share of Spending by Channel
Source: SymphonyIRI Market Advantage™; 52 weeks ending 9/9/2012 and same period prior year

Where is private label strong?

Penetration gains are helping to support growth across a number of categories where private label share is already above average.

Top Categories with Above Average and Increasing Private Label Share
2012 vs 2010: Multi-Outlet + Convenience
Note: Multi-Outlet (Supermarkets, Drugstores, Mass Market Retailers, Military Commissaries and Select Club & Dollar Retail Chains) and Convenience Stores.
Source: SymphonyIRI Market Advantage™; 52 weeks ending 9/9/2012 and same period prior years; Top 100 Categories, Based on Dollar Sales

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