Commentary From Our Chairman / CEO
Private Label Isn’t Private Anymore!
Michael D. Sleeper, Chief Executive Officer, Imperial Distributors, Inc.
According to a Nielsen/PLMA Study, today’s supermarket shopper spends $1 of every $5 on store brands, and private label sales reached $112 billion in 2013, and continues to outpace national brands. The data from the study further showed that private label share is highest in the supermarket channel at 23.4% of unit sales and 19.4% of dollar sales.
In a consumer survey conducted by Deloitte LLP and published in May, 2014, it was found that 88% of shoppers think most store brands allow them to save money without sacrificing on quality. A center store survey conducted by Supermarket News also showed that shoppers feel more comfortable using private brand products due to their increased enhancements in quality, packaging and product innovation. The SN study further indicated that many supermarket retailers use private label as a “competitive strategy” to respond to the increase in the grocery and food business by other types of retail formats.
During the Great Recession, shoppers looked out of necessity to private label as a “lower-priced” option for saving. Today’s “value-oriented” consumers still shop more conservatively, and look to save money, so they continue to embrace private label even though the economy is better.
As a Topco private label member, we have seen firsthand the tremendous growth and expansion of private brand products. Today, our private label program includes over 2,000 HBC and GM items with margins for our customers that exceed national brands by 10% to 25%. Our private label consistently ranks in the top 5 HBC selling categories for our supermarket retailers. Pain remedies along with cold/flu relief products lead the way in the HBC category while stationery, school supplies and pet care are top sellers in GM.
While private label offerings and sales continue to be robust, it is extremely important to have a balanced assortment, and friendly co-existence, between private label and national brands. In HBC, there are shoppers who have a strong brand loyalty, and are less willing to switch, and those brands must be available at store level, so they won’t go elsewhere for them. The private label alternative to the national brand needs to be available as well for the not so brand-conscious shopper.
As supermarkets continue to expand, promote and build upon their private label programs, and gain the loyalty and confidence of their shoppers, store brands will come out from their “private role” and find their way to the consumer’s “must have” shopping list.
For comments or questions, contact us by phone at 508-756-5156, or e-mail: msleeper@imperialdistributors.com