WHERE DO PRIVATE-LABEL PRODUCTS FIT INTO THE OVERALL RETAIL MIX?

NIELSEN | As channels continue to fragment and the fast-moving consumer goods (FMCG) landscape becomes more dynamic, the composition of households is changing, too. Individuals are driving their own agendas, purchase decisions and preferences, and that means manufacturers and retailers need to analyze purchasing with more granularity.

At a macro level, value grocery and online continue to drive shopping occasions, leading growth in trips per shopper. That said, however, at the individual shopper level, consumers are making 1% fewer trips than they were a year ago. This is primarily because of decreased traffic to pet and drug stores. In looking at e-commerce trends for these two areas, it’s likely that consumers are covering this gap—and possibly more—by making their purchases online.

In addition to being open to new shopping channels, consumers are paying more attention to how they spend their money, particularly when it comes to store-branded products. While consumers will always be interested in getting the best price for the products they buy, the perceived quality gap between branded and private-label products is fading. Notably, just under 74% of Americans say they believe store brand products are a good alternative to name brands.

And we can see this sentiment come through in the sales data from the past few years. Private-label products have posted a compounded annual growth rate of 1.7% over the past four years, ahead of the 1.4% posted by branded products. The difference is even greater over the past year: private-label gained 0.7% in sales, while branded products decreased 0.3%.

Where Do Private-Label Products Fit into the Overall Retail Mix?

For additional insight, download our Total Consumer, Volume 2, report.