CHICAGO — Mass market sales of store-brand merchandise increased during the pandemic, but the market share gains that characterized the preceding years have softened, according to a new report from IRI.
“The shift to at-home consumption, trading up to premium offerings, stimulus dollars and on-shelf availability are all factors steering shoppers away from store brands,” IRI said in a year-end report titled “Consumer Demand for Private Brands.”
Store brand consumer goods sold through all outlets — supermarkets, pharmacy retail, warehouse clubs and dollar stores — generated revenue of $963 billion in the 52 weeks to October 3, according to IRI, which said that sum represents a market share of 17.3%. That compares to $927 billion in sales and a 17.7% market share in the preceding 52-week period. For the 52 weeks ended October 2019, sales of private label merchandise increased 12% to $828 billion, good for a 17.5% share of the market.
The trend reversal is visible in the U.S. grocery sector, with private label losing share to national brands in the edibles category in 2021. After growing at a slightly faster pace (18.4% to 17.2%) in 2020, edible private label products lost share to national brands — and by increasingly large margins — in each of the first three quarters of 2021.
The IRI report echoes earlier research attributing store brands’ relative weakness in the grocery channel to such factors as supply chain interruptions and lifestyle adjustments around remote schooling and work. Seniors and retirees represent the cohort most receptive to store brands, as measured by the percentage of their spending (18.9%) on private label merchandise through the first nine months of 2021. Their spending on store brands increased 0.2% from the year-earlier period, IRI said. Spending declined for all other cohorts, with softness most noticeable among Millennials and Gen Z consumers.
While often viewed as similar, store brand products are rarely seen as superior to national brands, even among loyal store brand buyers, IRI said. For instance, 54% of store brand loyalists see national brand pet foods superior, and 40% view store brand pet foods as comparable in quality to the national brands. Fresh chicken and salty snacks are the most comparable categories in the eyes of store brand loyalists, though even here the loyalists are more likely to rate national brands more favorably than store brands in terms of quality.
Private brands hold large category shares of perimeter edibles and general merchandise, where options are more limited.