New study shows store brand growth driven by rising quality, identifies top categories and retailers

Nov. 15, 2012 - PRLog -- Store brands have been taking share from manufacturer brands across many consumer packaged good categories for some time, but what is driving that trend, how likely is it to continue, which retailers have the strongest store brand programs, and what can manufacturer brands do to win back consumers?

These questions are answered in Consumer Edge Insight’s just-released report called Store Brands: Which Categories Are Likely to Grow, Which Retailers Are Best-Positioned.  The findings of the report are based on a survey of 4,055 adults who are representative of the US population.  Respondents answered questions about what types of brands they buy in each of 57 product categories (including food, beverage, household, and personal care products), why they choose that type of brand, and what manufacturer brands could do to win back their business.  Respondents were also asked which of 20 retailers’ store brands they buy regularly, how satisfied they are with the brands they’ve purchased, and how their loyalty to the store is affected.  The questionnaire and sample design were identical to a survey completed by Consumer Edge Insight in August 2011.

Some of the key conclusions of this year’s report include:

● Nearly everyone (91%) buys store brands least some of the time across the 57 product  categories that were covered, up from 88% last year


● Although down from last year’s levels, spending less on packaged goods is one of the most popular ways for consumers to be economizing right now.  Consumers are especially like to be trying to spend less on household products (50%) and personal care products (45%), followed by food to eat at home (43%) and non-alcoholic beverages to consume at home (40%).

● Overall, while 31% of consumers believe that manufacturer brands are better than store brands, nearly as many (27%, up 3 points from last year) think that store brands offer just as good quality.  Further evidence of rising store brand quality can be seen in looking across what drives purchase decisions between store brand and manufacturer brand in each of the covered categories, as quality factors rose and low price fell as  reasons for buying store brands, compared to last year

● However, consumers’ perceptions of store brand quality varies widely by category, as does the relative importance of quality vs. low price when deciding which brand  to buy, creating a wide disparity of store brand penetration rates. Categories with the highest perceived store brand quality are non-organic milk, plain bottled water and canned vegetables; categories with lowest perceptions of store brand quality are toothpaste, chocolate candy and cosmetics.  The categories showing the greatest improvement in perceived store brand quality since last year are enhanced water, orange juice, and plain bottled water.

● When asked what manufacturer brands can do to win back those who are buying store brands, the most common answer was lowering prices (50%) or offering more promotions/discounts (40%).  Some people (20% on average) said that an improving economy might make them buy manufacturer brands, particularly in potato chips, cooking oil, and liquid cleaners.  However, there were many product categories where store brand buyers  cited other factors within  manufacturers’ control such as improving taste, quality , or performance  which would make them buy manufacturer brands more often

● Among the 20 major grocery and drug retailers covered, Kroger has the highest penetration of store brand purchasing among its customers, but Costco and Publix have the highest average satisfaction rates, and A&P and Costco are the most successful in terms of their store brands having a positive impact on customer loyalty.  Although A&P was not a top performer in terms of store brand penetration or satisfaction, over 80% of consumers who have purchased A&P’s store brands say they make them more likely to shop there.  And nearly 70% of those who have purchased Kirkland say it makes them more likely to shop at Costco.

David Decker, President of Consumer Edge Insight said: “While US consumers are slightly less likely to economize when buying packaged goods than they were in 2011, use of store brands continues to rise in many categories. This is driven by store brand quality continuing to improve across most of the categories covered in our research and store brands are likely to continue to gain share in many product categories. However, perceptions of private label quality and consumers’ willingness to pay premiums for manufacturer brands vary widely by category.  Our report also shows which retailers are most successful at using store brands to drive greater loyalty to their stores, and provides in-depth insights for branded CPG companies that are looking to win back market share in each of the 57 categories covered.  This is a valuable resource for companies on both sides of the store brand battleground.”

Subscribers to Consumer Edge Insight’s report receive:

● Detailed understanding of how brand selection criteria and perceptions of store brand quality vs. manufacturer quality vary across 57 product categories

● Understanding of how store brand usage and perceptions vary between heavier and lighter category users

● Which categories have seen the strongest increase in store brand quality since 2011

● Ranked list of which categories are most likely to see further growth in store brand penetration

● Information on what consumers would want from manufacturer brands in each category in order to buy them more often

● Look at which of the 20 largest CPG retailers have the most successful store brand programs through the eyes of their customers (trial, satisfaction with store brands, impact on loyalty to store, impact on satisfaction with store)

● Key implications for branded CPG companies, CPG retailers, and store brand manufacturers


For information about how to subscribe to this report, please contact David Decker, President of Consumer Edge Insight, at ddecker@consumeredgeinsight.com or by phone at 203-504-7558.

About Consumer Edge Insight:  
Consumer Edge Insight is a market research and consulting firm that helps companies and investors that want to have deeper insight into how consumer behavior is changing around the world and how to profit from those changes. We help companies monitor key trends and develop strategies to enhance shareholder value. We help institutional and private equity investors make better investments by identifying which companies are most likely to prosper in the future and tracking company performance.  To learn more, please visit www.consumeredgeinsight.com