National brand loyalty slid for third consecutive year as more shoppers favor store brands, says Deloitte’s 2013 American Pantry Study.
Nearly nine of 10 (88%) survey respondents report they have switched to buying several store brands that they feel are just as good as national brands – and few consumers plan to switch back. Only one of four (27%) plan to do so as the economy rebounds. That’s an eight percentage point decline from the previous year.
“One of the most notable year-over-year trends in the study is how embedded frugality has become due to the recession,” said Pat Conroy, vice chairman, Deloitte LLP and consumer products sector leader. “Prudent consumers and improving perceptions about store brands are squeezing national brands’ position. The gap between the few ‘must have’ brands on shoppers’ lists and others on the shelf may be widening, making it more important for brands to differentiate through innovation, quality and performance. Consumer product companies may also consolidate low and mid-level performers and shift investment to the category leaders.”
The survey results are good news for the continued success of the annual trade show of the Private Label Manufacturers Association. PLMA recently announced that its event will take place Nov. 17-19 in Chicago. More than 2,300 booths are expected on the show floor.
Exhibiting companies will offer up tens of thousands of products across virtually every food and beverage category – including prepared foods, frozen and refrigerated, ingredients, snacks, gourmet and specialty – while on the non-food side, exhibitors feature health and beauty care, over-the-counter pharmaceuticals, vitamins & nutrition, household, kitchen and cleaning products, DIY and general merchandise.
As these store brands become more entrenched in the pantry, loyalty to national brands continues to slide, the Deloitte survey reports. However, consumers appear to be selectively loyal to certain brands.
Brand loyalty dropped for the third consecutive year in the survey. When asked why certain brands are no longer a priority for their households, consumers cited “other brands are available on sale” as the No. 1 reason.
Private label sales have continued to expand and set new records for total dollar volume and market share. According the latest industry sales data compiled by The Nielsen Company, private label unit market share in supermarkets has reached 23.1% and dollar market share is now 19.1%. Total private label sales in the United States last year reached $108.3 billion as store brands growth continued to outpace the national brands. Across all outlets, the products contributed $3.1 billion in incremental sales last year alone. Since 2009, annual growth of store brands sales has averaged 4.9%, compared to national brands growth of just 2.1% annually.
Even as the economy improves, 94% of Americans indicate they will remain cautious and keep their spending for food, beverage and household goods at its current level.
More than nine in 10 (92%) consumers surveyed indicate they have become more resourceful, and 86% say they are getting more precise in what they buy – attitudes that have remained consistent in the three years Deloitte has conducted the study, and across income levels.
Despite enduring frugal attitudes, few consumers feel they are making any compromise: More than seven of 10 (72%) consumers indicate that, even though they are spending less on household and grocery items, it doesn’t feel like they are sacrificing much. That finding represents a seven percentage point increase in two years.