Name-brands should prepare now for customer comeback

By Caroline Scott-Thomas

- Last updated on GMT

Related tags Private label Brand Marketing Private label manufacturers association

Branded food manufacturers should start preparing now to win back customers from store brands when the economy improves, advises a new report from market researchers The Integer Group and M/A/R/C Research.

Private label, or store brand, products have seen a huge increase in popularity, with sales up $12bn – 17 percent – over the past two years, according to figures from The Nielsen Company.

Opinions vary about whether the private label boom will continue after the recession, as store brands have traditionally done well in times of economic hardship only to slump again when the economy has improved. However, during this recession, there has been a concerted effort from manufacturers to not only lower the cost of private label foods, but to target additional consumer expectations in terms of overall value. This could provide additional challenges for manufacturers of name-brand products in winning back consumers who turned to store brands in the midst of economic hardship.

But this latest report, based on the researchers’ monthly nationally representative survey of 1,200 adults, suggests that frugal shopping behaviors could be easing – and that there are ways for manufacturers to recapture their former customers.

“To remain competitive in this challenging shopping environment, name brands have an arsenal of tactics at their disposal,”​ the report states.

These include concentrating on on-shelf messaging, since more decisions are being made in-store; good communication of value; offering a range of product varieties; and continuing to use coupons and rebates.

“Shoppers are still torn between convenience and saving money as primary shopping goals,” ​the report says. “…Retailers and brands (private-label and value players) that focus on lower prices will be better positioned to face this challenging selling environment. But strongly entrenched name brands can still compete by properly communicating value to their shoppers.”

Quality and cost

This idea of value goes much further than price alone, with consumers increasingly weighing up product quality with cost.

It has also been suggested that as consumer confidence improves, purchases of foods and beverages for health and wellness could rise – so those labeled ‘organic’, ‘natural’ or ‘high fiber’ are forecast to do well, a factor that could help name-brand products to regain market share.

The Private Label Manufacturers Association says that in the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent. And in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent.

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