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Even as the economy begins to rebound, budget-friendly private labels continue to draw in consumers, according to a new report from Chicago-based Information Resources, Inc. (IRI). The report, “IRI Times & Trends Report: Game-Changing Economy Taking Private Label to New Heights” found that private label unit share has grown to 22.8 percent (up 1.2 points) in the past 12 months, while dollar share has grown 0.7 points to 17.6 percent.
This is in line with a Nielsen report in August that private label sales were up 7.4 percent compared with the previous year as well as Mintel’s recent findings that private labels saw twice the growth as branded items in 2008, largely due to the rapidly improving quality and packaging of store brands.
Many private label offerings, like Target’s Archer Farms, Safeway’s O Organics and Supervalu’s Wild Harvest, are now viewed as on the same level as brand-name products, according to the report.
“The popularity of private brands will continue as a result of several factors,” said IRI Consulting and Innovation president Thom Blischok. “These products offer a very strong value proposition based on quality as well as price.”
Store brands were most strongly represented in the grocery channel, with a 25.6 percent unit share, followed by Walmart, where they have a 23 percent unit share. Supercenters (22.7 percent), club stores (17.7 percent), drug stores (17.6 percent) and dollar stores (16.8) followed. But between 2008 and 2009, every channel saw private labels expand both their dollar and unit share.
Private labels have seen significant growth in categories like shortening and oil, tomato products, and ice cream/sherbet between the years 2006 and 2009. However, in categories where national brands are dominant, such as weight-control products, cat food and margarine, store brands have seen their shares drop.
While private labels saw one of their biggest share increases in toilet tissue (up 5.6 points), they saw one of their biggest drops in paper towels (down 6.8 points). Similarly, while butter has seen a 4.6-point increase in private label penetration, margarine has seen a decrease of 3.5 points.
But overall, the trend is one of significant private label growth. Whether this is due primarily to store brands’ recession-friendly prices remains to be seen, but Blischok believes that as long as the bar continues to rise for the quality and convenience of private labels, their market share will continue to rise as well. “Shoppers will continue their frugal shopping patterns long after the recession ends,” he said. “The private label phenomenon will continue to be a bright spot for innovative retailers that invest in providing a high-quality, convenient, affordable alternative to shoppers.”