Consumers have increasingly turned away from national brands towards private label, or store brands, as they have begun to feel the effects of the economic downturn. The latest survey, carried out by ICOM, a division of Dallas-based Epsilon Targeting, suggests that the “perceived risk” of children’s products leads to a reluctance to change to sort brands.
“Perceived risk, that’s what is driving these key consumer decisions. This is the kind of insight that national brands can use to reach customers with promotions that meet their needs and bring them back,” said Warren Storey, ICOM marketing director.
“These results highlight that understanding customer psychology, and tailoring promotions accordingly, is a significantly more effective win-back strategy than scatter-shot, one-size-fits-all offers.”
Last week, FoodNavigator-USA.com reported on results from a poll by GfK Custom Research North America for the Private Label Manufacturers Association (PLMA), which found that over 90 percent of American consumers say they are likely to continue buying store brands even after the economy improves, and nearly half would like to see more of them.
The poll also showed that 35 percent of consumers are trying private label products for the first time in categories where they once only bought national brands – and 94 percent said the store brand products compared favorably.
The new poll shows that 59 per cent of the 1,530 American consumers surveyed by ICOM have switched to store food and household products and away from national brands in the past six months.
However, when it comes to store brands for children and pets, American consumers are far more reluctant to switch from national brands.
“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” said Storey.
In the 2001-2003 recession, private label’s unit market share climbed from 20 percent to 21.8 percent, according to the PLMA. Likewise, in the 1990-1991 recession, unit share for retailer brands moved up from 17.6 percent to 20 percent. And consumers tended to stick with private label even after the economy recovered.
Private label products account for more than $81bn in the US, with health and wellness claims including no trans fats, no saturated fats, multi-grains and antioxidants among the strongest-growing categories.