The Growing Power of Store Brands

WalmartLabels-BAfter our digression with a special weekend Struming celebrating Derek Jeter’s 3000th hit, it seemed like it’s time to get back into the Wednesday Struming routine. Today’s Struming looks at the growing power of store brands. In recessionary times, many consumers trade off from national, higher priced brands to store brands. No surprise. But in today’s world, there’s a growing appreciation that the “trade off” is some cases is an easy one and not painful at all. The underlying phenomenon is that that brand loyalty has been eroded a bit and those consumers which found the store brand to be an acceptable alternative don’t readily switch back. The following are interesting thoughts on this topic from Sarah Mahoney who covers the retail industry for MediaPost’s Marketing Daily. Good stuff, Sarah.

The latest numbers are in, and it looks like consumer enthusiasm for private-label brands hasn’t been slowed by the recovery: Dollar market share for private-label products hit all time highs in supermarkets, drugstores and all channels.

“Sales of store brands saw gains of more than 2% in U.S. supermarkets and nearly 5% in drug chains in 2010,” reports the new Private Label Manufacturing Association’ 2011 Private Label Yearbook. “Over the past decade, annual sales of private-label products have increased by 40% in supermarkets and by 96% in drug stores.”

PLMA, which tracks private-label sales and share trends based on data from The Nielsen Company, says that in total outlets, store brand sales climbed 2%, and dollar share gained a half point to a new record, with sales coming in at $88.5 billion. (The trade association defines total outlets as all U.S. supermarkets, drug stores and mass merchandisers, including Wal-Mart.)

In supermarkets, store brands accounted for 19.1%, and 23.5% of all unit shares. In drug stores, they rose to 14.7%, and comprised 16.2% of units. And for the total, they rose to 17.4%, or 21.8% of all units.

The PLMA also says an estimated $15 to $20 billion of private-label goods are sold in untracked channels, such as warehouse clubs, convenience stores, dollar stores and limited assortment chains.

All that, of course, isn’t great news for marketers who work on national brands. Supermarket national brands actually lost share, which the group called “highly unusual, if not unprecedented”: National brands slipped 0.1% in dollar sales, a decline of $149 million; unit sales gained 1%.

The group says its data show that many of the consumers who experiment with more private label brands during the recession are happy with their “no name” products. “A third of those polled reported that they are buying more store brands now compared to a year ago and over half describe themselves as frequent store brand shoppers,” the report says.

“Half again said that they are more aware of store brands today than they were a year ago, and 8 out of 10 believe that store brand products they buy are either equal to or better than national brands.”

This is another example of how the past is not a predictor of the future and how “old rules” may not apply to a changing world. Thoughts and feeback are always appreciated.

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  1. Great Strumming or Struming as you spell it. Went nuts over Canned Heat.
    Speaking of Loggins and Messina, Baby It’s You! (’82) was just on the tube with Dolores Messina (BBDO Casting Director you may recall) as Mama Capadalupo. I think your column (blog, whatever) is terrific.


  2. Lonny Strum says:


    I thought alot about whether to call the blog Strummings or Strumings. But I went with the correct spelling. Thought.

    I remember “Baby it’s You” (the movie). Good flick. We are getting old.

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