Jacksonville, Fla., (June 5, 2018) – As the brick-and-mortar grocery industry faces increasing competition from all angles, an effective brand strategy can be the key to sustained success for retailers. Shoppers turn to different brands for different needs and seek a balance when it comes to retailers and brand offerings, according to Acosta – a leading full-service sales and marketing agency in the consumer packaged goods industry – and the company’s Why Brands Matter report.
“Brands are the fuel that powers shoppers to make more trips, spend more per trip and stay loyal to products and channels,” said John Clevenger, Managing Director and Senior Vice President, Strategic Advisors, at Acosta. “National brands continue to dominate, with a worth of over $558 billion in 2017, compared to $124 billion for private label brands, which are marketed by the retailer under their own brand and typically positioned as lower-cost alternatives to national brands. A study of more than 100 retailers revealed that the retailers growing both national and private label brands are experiencing the best overall growth, proving that a strategic mix is key.”
Acosta’s 2018 Why Brands Matter report takes an in-depth look at the value and current state of national and private label brands, highlighting:
Why Brands Matter
- While there are a variety of reasons shoppers may choose a private label brand, cost savings is the primary driver.
- Many shoppers view purchasing private label brands (or store brands) as a compromise; overall, shoppers view national brands to be superior to their private label brand counterparts in most categories.
- Shoppers felt “name brands are better than store brands” in 41 out of 53 categories.
- Shoppers felt “name brands and store brands are ‘about the same’” in 12 out of 53 categories.
- Shoppers felt “store brands are better than name brands” in 0 out of 53 categories.
- Shopping trips driven by national brand purchases are more valuable than private label brand trips on average by 65 percent.
- The top three reasons shoppers said they purchased national brand products while grocery shopping were:
- “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.”
Not All Categories Are Created Equal
- Generally, the more personal, innovative and differentiated the category, the more likely a shopper will choose a national brand over a private label brand.
- Several of the categories for which shoppers indicated they purchased national brands “exclusively” or “mostly” are personal care products used on or applied to the body.
- Nearly all of the categories for which shoppers reported “exclusively” or “mostly” selecting private label brands tend to contain staple items that are consumed.
The Value Channel is Growing
- Value is one of the fastest growing channels.
- While the value channel has a large emphasis on private label brands, this isn’t necessarily what is driving shopper traffic. Shoppers reported that the highest influencers driving them to the value channel are best everyday prices (49 percent), better value for their money (47 percent) and cost savings/help with budget (45 percent).
- Despite its growth, the value channel has limited appeal among a limited base of fans. Shoppers that frequent the grocery and mass/super channels find that value retailers fall short in fresh foods, convenience and promotions.
“To craft the best possible brand strategy, use research and analysis to help strike the right balance with national and private label brands in each department and category,” added Clevenger. “A clear takeaway for retailers is that they should understand the different roles national and private brands play. Manufacturers should concentrate on telling a compelling brand story and selling their expertise and understanding to build a brand connection with shoppers.”
Acosta’s 2018 Why Brands Matter report was completed via an online survey of the company’s customer shopper community panel as well as multiple Nielsen research reports. To access the full report, visit www.wycocd.com/news.