Private-label strengthening in weak economy

by Bryan Salvage
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NEW YORK – Most American consumers appear to be at odds with recent reports the economy has improved. More than eight out of 10 supermarket shoppers see no improvement in the economy, and 40% actually believe things have gotten worse, according to a new nationwide study titled Recession, Recovery and Store Brands.

For many consumers, the study affirms the appeal of store-brand products is stronger than ever and may even be intensifying.

These findings are based on a poll of approximately 800 main household grocery shoppers conducted in February 2010 by GfK Custom Research North America for the Private Label Manufacturers Association (P.L.M.A.) in New York. The full report is available for download at www.cli.gs/PLMAGfKRpt.

Study highlights include:

* For most American shoppers, the recovery hasn’t begun. Asked whether the economy has changed over the past few months, 40% said conditions were worse, while another 42% said things have stayed the same. Fewer than one in five felt the economy had improved.

* As a result, the recent surge in store-brands sales is likely to continue. When asked how important economic conditions were in deciding to buy a supermarket store brand, four in 10 responded "very important." A solid majority of consumers -- more than six in 10 -- said they plan on buying more private-label as they attempt to stretch their food dollars. Half of shoppers intend to spend less money on groceries in the months ahead.

* Consumer awareness of store brands is also increasing. More than half of respondents said they are more aware of store-brand products now than they were a year ago.

* Shoppers who identify themselves as "frequent" buyers of store brands are at an all-time high. Fifty-seven percent said they buy private-label products frequently, a figure that was under 55% one year ago.

* More shoppers are switching to store brands in product categories where they had previously only purchased a national brand. Forty-three percent report they have recently forsaken a familiar national brand for a private-label counterpart, a marked increase since June 2009 when only 35% said they had done so.

* All shoppers who switched are pleased with their decision. Ninety-seven percent compared store brands favorably to their previous national-brand choices in the same categories. About half said their store brand selections compare "very favorably," a dramatic increase from the June 2009 study when only one-quarter reported favorably on switching.

Study participants endorsed a variety of strategies to cope with what they see as a persistently difficult economy.

How do participants think the economy will impact their supermarket shopping habits? More than two-thirds said they will take advantage of discounts by buying larger sizes or quantities for items they regularly purchase; two-thirds will look for more coupons and promotions on national brands. About one-third plan to change the stores or types of stores where they do their primary grocery shopping.

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