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There may be glimpses of recovery discernible amid all of the gloom and doom of the recession, but one clear winner of the economic downturn has been private brands, according to Stamford, Conn.-based private brand broker and consumer marketing firm Daymon Worldwide in its new report, “The Maturing U.S. Recession & Implications for Private Brands.”
“In a nation where consumer spending accounts for 70 percent of the GDP, and where food is the second-largest expense in the family budget behind housing, absolutely private brands are on the front burner of every retailer during this recession,” notes Alex Miller, Daymon’s president.
According to the report, although the recession is technically drawing to a close, consumers will still experience persistent unemployment, resulting in a further decline in median household income, while higher taxes and higher interest rates will deplete pocketbooks further. “As a consequence, consumers will feel as much or more of a squeeze on their incomes during recovery, and perhaps afterwards, as during the recession itself,” observes Daymon’s global research manager, Ron Shirk, the report’s author.
Having performed well during the recession — according to IRI, their unit share rose 1.2 points for the 52 weeks ending in July, reaching 25.6 percent in grocery — private brands won’t easily relinquish any of their gains with cash-strapped consumers, says Daymon, predicting that “learned” shopper behaviors will last beyond the end of the recession and become entrenched over the long term.
This scenario presents private brands with both opportunities and challenges. Daymon’s report found that such products have evolved into a focal point of retail strategy and a key differentiator for retailers, with savvy shoppers ever on the lookout for the best private brands.
“For private brand retailers and manufacturers, the challenge is to fully grasp this opportunity and deal with the recession fact-set even after the recession,” advises Miller. “There is much to be done to meet this challenge. Private brand programs are not monolithic, and the best approaches and solutions will not be, either.”
For more information on “The Maturing U.S. Recession & Implications for Private Brands,” contact Daymon’s director of corporate communications, Tim Davis at 203-352-7678 or [email protected].