Private Label Brands Gain Favor Among U.S. Consumers

Private Label Brands Gain Favor Among U.S. Consumers

Once considered a lower-price, lower-quality substitute for name brands, private label products, or store brands, are viewed positively by the majority of U.S. consumers. Nearly three-quarters (72%) of American consumers believe that private label products are good alternatives to name brands according to a new survey by The Nielsen Company. The survey indicates that an improved sense of quality is likely a driving factor for consumers’ positive attitude toward private label products. Sixty-three percent of consumers believe that the quality of the private label brand is as good as name brands and one-third (33 %) of consumers tell Nielsen that they consider some store brands are actually higher in quality than the name brands.

“While private label products continue to follow the success of consumer packaged goods (CPG) manufacturers’ name brand introductions, more CPG retailers are making private label a priority with messages on quality as strong as messages on value,” said Todd Hale, senior vice president, Consumer & Shopper Insights, The Nielsen Company.

Price and Value Matter

According to Nielsen’s survey, price and value are paramount. Seventy-four percent of consumers believe it is important to get the best price on a product. Two-thirds (67%) of consumers agree that store brands usually provide “extremely good value” for the money while 35 percent of consumers are willing to pay the same or more for store brands if they like it. Just under a quarter (24%) of consumers believe that name brand products are worth the extra price.

“In today’s economy, consumers are looking for ways to save money and for many of them, that means taking a new look at private label products,” said Hale. “With more retailers offering satisfaction guarantees on private label purchases and even serving up blind taste testing and trial programs, consumers’ exposure to private label products has never been greater,” said Hale.

Rising Commodity Prices Continue to Drive Private Label Sales

Earlier analysis by Nielsen shows that an increase in private label dollar sales is driven primarily by rising commodity and food prices, particularly in staple categories that are dominated by private label brands and not in unit sales. However, a recent uptick in private label unit sales suggests that budget-conscious consumers may be starting to shift away from some established brands in search of better deals. Private label represents 16% of dollar sales and 21%of unit sales, indicating that branded products still capture the lion’s share of product category sales.

“Private label development varies greatly by department and we see strongest growth in products where private label has historically been strong,” said Hale. “Translating private label growth outside of commodity categories requires innovation — an area where CPG manufacturers, rather than retailers, traditionally excel.”

Private label products account for more than $81 billion in the U.S, up 10.2 percent over the past year.

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