Growth and Consumers Dependence Dwindles

Growth and Consumers Dependence Dwindles

Safeway Store Lifestyle look Produce Dept.

Safeway Lifestyle Produce

By Susan Viamari, Editor, Times & Trends

As has been the case in past recessionary periods, the country’s latest economic downturn served to reinforce store brands’ position within the CPG industry. But, the recession has prompted change across national brand manufacturers as well. From new products to pricing, national brand CPG marketers are rethinking their strategies in an effort to protect and grow share of their own product lines. National brand manufacturers have made progress. Store brand share gains have slowed, in some instances turning negative. That said, it’s not all doom and gloom for store brands. As you can see from the below graph, store brands continue to gain share within the CPG industry, but at a slower pace than they were a year ago at this time.

Store Brand

Much has been written about store brand packaged goods over the past several years. No doubt, store brand products have been playing several important roles during this timeframe.

For many consumers, store brands are playing a central role in money-saving strategies. Store brands also offer considerable savings over regularly-priced national brand products. For the more than 25 percent of consumers struggling to afford weekly groceries, these savings have been like a lifeline in stormy seas.

For retailers, these products offer an opportunity to differentiate themselves from competitors, while simultaneously enjoying a larger margin versus nationally branded products. Logically then, retailers have been, and will continue to be, heavily focused on growing the depth and breadth of their store brand offerings.

For example, Safeway is working to build an organizational framework that will allow them to completely manage their store brands in house. Meanwhile, Supervalu plans to accelerate the growth of their store brands with improved distribution, pricing optimization and improved shelf placement 1.

Efforts such as these have been quite successful at building store brand positioning. Today, store brands hold 18.3 percent share of CPG dollar sales, representing 23.1 percent of units sold.

These shares represent a 1.9 point and 1.5 point increase versus 2007, respectively, but are nearly flat versus a year ago. This marks a rather noteworthy change, as store brand share jumped considerably between 2008 and 2009.

The full report discusses the importance of maintaining satisfaction among current store brand buyers, and emphasizes the critical need to drive trial and repeat purchase behavior across new customer segments through a variety of methods as well. The sooner marketers embrace this as a key to success, the sooner they can put together a comprehensive plan and execute on it. For a deep dive into trends shaping the future of store brand CPG and tips to succeeding this rapidly evolving marketplace, view the full report – which can be found on the SymphonyIRI Web site.

1See ‘Store Brands Decisions’, May 11, 2010

Information Resources, Inc. (IRI)

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