Sales Surge More than 10%
To Set Market Share Record
By Jack Grant
And the beat goes on for store brands.
Sales of private label in major retail channels surged by more than 10% in 2008 to a record $83.3 billion. Supermarkets, drug chains and mass merchandisers combined sold a billion more private label units versus a year ago. Store brands accounted for 42% of the total gain in dollar volume coming into the three mainstream channels, according to data compiled by The Nielsen Company and published in the Private Label Manufacturers Association’s 2009
Private Label Yearbook.
In supermarkets, store brand sales soared by +9.4%, outdistancing national brands, which added only +1.4% in sales versus the year prior. Store brands were up $4.6 billion for a total of $53.8 billion in the channel. Private label dollar market share increased to 18.2% (from 17.1%) and set a new record. Private label also saw a +1.6% gain in unit volume, while national brands units declined -4.3%. As a result, private label unit market share advanced more than a full point to 22.3%, another all-time high.
In drug stores, dollar volume grew +14.4%, or nearly four times the rate of national brands, which were up +4.1%. As a result, store brand dollar market share climbed to a record 13.2%. Private label units meanwhile increased by +9.1%, and private label unit share rose to 15.2%, yet another high.
The solid gains in unit volumes, when measured against the results for national brands, indicates a real shift in shopping behavior, as consumers increasingly made the switch from national brands to purchase retailers’ brands instead. Clearly, the economy was a leading reason for the extraordinary growth in store brands. A recent series of polls conducted by
GfK for PLMA revealed that three out of American shoppers agreed that current economic conditions were important in their deciding whether to purchase supermarket or grocery
stores’ brands.
But the outstanding results at year-end can also be attributed in part to a strong foundation of consumer acceptance and patronage of private label products that predates the current economic situation. Supporting this view, fully 91% of shoppers in the GfK survey said they will continue buying store brand products after the recession ends.
The PLMA 2009 Private Label Yearbook is available to association members, retailers and wholesalers at no charge. It is also available to others by request at a cost of $1,500. To order a copy of the Yearbook, contact PLMA at (212) 972-3131.
JANUARY 2010
New Sales Opportunity Emerging
As Hispanics Buy More Store Brands
By Lynne Cooke
Store brands – already increasing in sales due to the recession – are getting another boost that will keep up the momentum. Many Hispanic shoppers are buying more private brand products. The trend is expected to continue in the future, according to new research by the Food Marketing Institute (FMI) Private Brands Group.
In fact, the study found that nearly four of ten Hispanic shoppers (37%) are purchasing more private brand products this year and a quarter of them plan to buy more in 2010.
“Hispanic people are discovering the value and quality of private brands. This is a welcome finding since food plays a central role in their culture,” said Patrick Walsh, FMI vice president of industry relations and collaboration.
More than seven in 10 Hispanics (73%) agree that “store brands are a great value for the money,” including over half (52%) who “strongly agree,” according to the report. Nearly as many (64%) agree that “store brands are just as good as national or international brands,” with more than four in 10 (42%) holding this view strongly.
“This emerging trend has tremendous sales potential for food retailers,” Walsh said.
The report, Se Habla Isn't Enough: Private Brands Among Hispanics 2009, found that private brands account for 31% of household grocery expenses among Hispanics, averaging $85.94 every two weeks out of a total of $266.63.
Household income does not affect the amount spent. In fact, Hispanics earning $50,000 or more per year spend the most at $92.67. Retailers that offer multiple tiers of products, from basic to premium, can effectively market private brands to Hispanics at all income levels.
Other findings bode well for the future of private brands, notably that the youngest shoppers, 18-24, spend more than any other age group at $99.41 every two weeks. In addition, 42% of Hispanics entering their prime earning years, 25-39, have increased spending on these products this year.
Contributing to the positive outlook is that the current U.S. Hispanic population is 45 million, a number projected to grow to 64 million — one in five Americans — by 2020, according to the market research firm Synovate. Their buying power is expected to double over that time span to $2.2 trillion.
Here are the most popular private brands among Hispanics, defined as items bought when shopping “every time” or “fairly often”:
- Carbonated beverages or soda or bottled water, 35%
- Hot or cold cereals and other breakfast products, 34%.
The report also uncovered opportunities for retailers to increase sales of private brand products among Hispanics. Among all Hispanic shoppers, 10% never buy these products and another 48% do so sometimes or rarely. This is especially the case among the less acculturated, defined as Hispanics who have resided in the U.S. less than half their lives and speak Spanish as their dominant language.
The study explored how retailers can encourage Hispanics to buy new private brands. Here are the top five factors rated “very influential” in moving them to try out a new product:
- Quality and healthy ingredients, 64%
- Price lower than the alternative national brand, 63%
- Discount coupons and sales, 59%
- Same ingredients and characteristics of the alternative national brand, 49%
- Store would donate a percentage of private brand sales to the community, 48%.
Although it is well recognized that having Spanish signs, labels, ads and bilingual employees are essential to reach out to Hispanic shoppers, these factors rated much lower in influencing them to buy new store brands.
Data for the report are based on telephone surveys by New American Dimensions of shoppers in the top 10 Hispanic markets — Chicago, Dallas, Houston, Los Angeles, Miami, New York City, Phoenix, San Antonio, San Diego and San Francisco — which together account for about 60% of the Hispanic population.
Marketing Management, Inc., a leading U.S. private brand marketing company, sponsored
the report.
To purchase the report ($150 for FMI Retailer/Wholesaler Members, $250 for FMI Associate Members and $350 for nonmembers), contact the FMI Store by calling 202.220.0723 or visiting www.fmi.org/store/.
