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    Private Label Share Will Continue to Grow: Study

    Private label share in the United States has risen dramatically across retail channels and product categories during the past two years as consumers continue to struggle with high food prices and other economic pressures, and this trend will continue through 2009 and beyond, according to a study from Chicago-based Information Resources, Inc.

    Private label share in the United States has risen dramatically across retail channels and product categories during the past two years as consumers continue to struggle with high food prices and other economic pressures, and this trend will continue through 2009 and beyond, according to a study from Chicago-based Information Resources, Inc.

    “With budgets strained to the breaking point, shoppers are scrambling for ways to save money,” says IRI Consulting and Innovation president Thom Blischok. “Shoppers are looking through a lens of affordability and have a reinvigorated interest in private label since the economic turmoil began.”

    According to “The 2009 Private Label Report,” the need for affordable packaged goods solutions is high, and private label products are going a long way toward answering that need.

    “Since many private label products are truly becoming mainstream these days, IRI refers to these products as private brands, such as Target’s Archer Farms, Safeway’s O Organics and Supervalu’s Wild Harvest, to name a few,” said Blischok. “The retailer halo is now foundational, and private brands are becoming as familiar and relevant as national brands in some categories.”

    The IRI Private Label Report provides a thorough review of private label performance and best practices across channels, categories and retailers, as well as current viewpoints from more than 1,500 consumers. The study also takes an in-depth look at the opportunities that exist for retailers and how branded manufacturers can more effectively compete against private label in a tough economy.

    Among the insights uncovered in the study are:

    -- Private label’s strongest growth performance tends to be such categories as cream cheese/spread, paper napkins, refrigerated entrees, and shortening and oil. Developing categories include pet supplies, cold/allergy/sinus tablets, refrigerated salad/coleslaw, and salad dressings

    -- Drivers behind the highest-performing regions and markets werre also analyzed, and revealed that grocery channel private label share is highest in the West, at 25.2 percent, and lowest in the Northeast, at 19.2 percent, for U.S. regions. For individual U.S. markets, Wichita, Kan., had the highest share of private label unit sales, at 34.3 percent in 2008, and New York City had the lowest, at 14.2 percent

    -- Four out of five shoppers are now “sold” on private label quality, indicating that product marketing during the current recession is successfully expanding the positive reputation and reach of these products

    -- Although nearly 80 percent of shoppers in 2008 have positive attitudes toward private label, vs. 73 percent in 2007, dollar and unit shares are still below 25 percent

    -- In personal care categories, branded manufacturers have successfully differentiated themselves in the minds of shoppers, which has made it difficult for retailers to successfully penetrate these categories with private label

    Consumers’ perception of private label quality is consistently high across U.S. regions and channels, the study found. Some regional variations do exist, which are driven by best-in-class regional retailers.

    “The evolution of the U.S. private label market has accelerated in the face of growing financial turmoil,” says Sean Seitzinger, SVP, IRI Consulting and Innovation. “As shoppers opt out of some products and stores, they will opt into others. It is critical for the ongoing success of CPG manufacturers and retailers to not only react to, but anticipate, these trends and be ready with products, assortments and store layouts that meet the shopper’s changing needs.”

    The study is a culmination of research that includes an exclusive IRI AttitudeLink survey of shoppers, a proprietary IRI InfoScan and Consumer Network data.

    For more information, visit http://us.infores.com.

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