Why brands matter

Print Friendly, PDF & Email

JACKSONVILLE, Fla. — As the brick-and-mortar grocery industry faces increasing competition from all angles, an effective brand strategy can be the key to sustained success for retailers, according to a recently released report from sales and marketing firm Acosta Inc.

Shoppers turn to different brands for different needs and seek a balance when it comes to retailers and brand offerings, Acosta said in a report titled “Why Brands Matter.” The report was based on results of an online survey of Acosta’s customer shopper community panel as well as Nielsen research reports.

“Brands are the fuel that powers shoppers to make more trips, spend more per trip and stay loyal to products and channels,” said John Clevenger, managing director and senior vice president of strategic advisors for Acosta.

“National brands continue to dominate, with a worth of over $558 billion in 2017, compared to $124 billion for private label brands, which are marketed by the retailer under their own brand and typically positioned as lower-cost alternatives to national brands,” according to Clevenger. “A study of more than 100 retailers revealed that the retailers growing both national and private label brands are experiencing the best overall growth, proving that a strategic mix is key.”

Acosta’s report takes an in-depth look at the value and current state of national and private label brands. Among the report’s findings:

• Cost savings is the primary driver of consumers’ purchases of private label brands, though there are a variety of contributing factors.

• Many shoppers view the purchase of a store brand as a compromise. Shoppers view national brands to be superior in 41 out of 53 categories. Shoppers told the researchers that name brands and store brands are ‘about the same’” in 12 categories. There are no categories in which respondents believe that store brands are superior to name brands, according to Acosta.

• Shopping trips driven by national brand purchases are more valuable than private label brand trips by 65%, on average.

• The top three reasons respondents gave for buying national brand products while grocery shopping were higher quality on taste and/or performance; the availability of coupons or promotions that made name brand purchases a better deal; and the consumer’s higher level of trust in name brands.

Generally, the more personal, innovative and differentiated the category, the more likely a shopper will choose a national brand over a private label brand, Acosta said.

Several of the categories for which shoppers indicated they purchased national brands “exclusively” or “mostly” are personal care products used on or applied to the body.

Nearly all of the categories for which shoppers reported “exclusively” or “mostly” selecting private label brands tend to contain staple items that are consumed.

Acosta said that private brands are worth $135 billion annually and account for 18% of revenue from sales of consumer packaged goods.

Private brand market share continues to grow at a rate of 3% annually, Acosta said.

Nearly one dollar in every five spent on packaged goods is used to purchase private brand ­merchandise.

“This growth in the financial success and status of private brands has largely been the work of a small, influential group of retailers,” Acosta said. “However, most retailers are now increasing investment in their own brands.”

While the value channel has a large emphasis on private label brands, this isn’t necessarily what is driving shopper traffic, according to the report. Shoppers said the main influencers driving them to the value channel are best everyday prices (49%), better value for their money (47%) and cost savings/help with budget (45%). “Despite its growth, the value channel has limited appeal among a limited base of fans,” Acosta said. “Shoppers that frequent the grocery and mass/super channels find that value retailers fall short in fresh foods, convenience and promotions.”

Companies aiming to craft the best possible brand strategy must use research and analysis to help strike the right balance with national and private label brands in each department and category, added Clevenger. “A clear takeaway for retailers is that they should understand the different roles national and private brands play. Manufacturers should concentrate on telling a compelling brand story and selling their expertise and understanding to build a brand connection with shoppers.”



Comments are closed.