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10/05/2021

FMI Research IDs Where Private Brands Excel, Fall Short in E-Grocery

Latest 'Power of Private Brands' measures store-brand success, outlines future opportunities
FMI Research IDs Where Private Brands Excel, Fall Short in E-Grocery
E-commerce presents a major opportunity to boost private brands. Source: FMI

A recurring theme throughout the ongoing COVID-19 pandemic has been the acceleration of online grocery shopping, but just how well have private brands fared?

According to the retailers and manufacturers surveyed by FMI - The Food Industry Association, for its latest "Power of Private Brands" report, 67% of the private label assortment was made available online to shoppers during 2020; 14% of private-brand sales were done online; and private brands grew 73% through e-commerce during the year.

It’s clear that there’s a foundation of success already in place by retailers to promote private brands to the growing number of online shoppers. However, FMI’s report also noted a lack of private-brand measurement online by retailers, and some areas where branded CPGs remain out in front of owned brands.

Doug Baker, VP, industry relations at Arlington, Va.-based FMI, told Progressive Grocer sister publication Store Brands that what surprised him most in the research was that 61% of food retailers surveyed said e-commerce, including home delivery and click-and-collect internet sales, is considered “a major opportunity for private brands,” and that percentage was even higher for companies already actively underway with private-brand e-commerce programs.

The report also found that more than half of the respondents said “they are boosting private-brand strategies for e-commerce,” including these main tactics that were put in place last year:

  • 39% said that they promoted private brands through email promotions and digital circulars;
  • 33% leveraged search engine optimization; and
  • 33% put a priority on promoting store brands via online brand pages and storefronts.

An effort to focus on those areas could be in response to where national brands seem to be out in front of private brands in grocery e-commerce.

FMI Research IDs Where Private Brands Excel, Fall Short in E-Grocery
Retailers should take a tactical approach to e-commerce when it comes to private brands. Source: FMI

“The study found that national brands continue to engage consumers in ways private brands have yet to fully utilize,” Baker told Store Brands. He highlighted 10 areas where private brands “fall short of manufacturer brands in digital real estate,” such as on the homepage, where only 20% of food retailers that were analyzed promoted private brands. Additionally, just over four in 10 food retailers included multiple product images on private-brand product detail pages, and about half of food retailers included banner ads on product listing pages and search pages, but only 20% of the banner ads promoted private brands.

Those findings in the report specifically came from consultancy FitForCommerce, which mystery shopped 25 food retailers’ e-commerce sites and identified 10 opportunities for food retailers to effectively target consumers with private-brand offerings. The FMI report also includes data from a consumer survey from FMI and The Hartman Group, a survey of food retailers and manufacturers, interviews with senior private-brand leaders, and e-commerce data from IRI.

Other key findings from the report include ways to leverage search optimization for store brands, IRI’s e-commerce sales numbers for the food industry as a whole (up 25% for 52 weeks ended Aug. 8) and in-depth demographic details. For instance, when shopping online, more than three-fourths of shoppers use digital coupons, and, further broken down, 80% of Gen Z/Millennial shoppers leverage coupons compared with Gen X shoppers (78%) and Boomers/mature shoppers (63%).

The report also noted how shoppers tend to seek private brands online versus national brands online, with 37% of shoppers seeking a private brand by name in a search, compared with 43% for a national brand. However, private brands beat national brands, according to the The Hartman Group research in the study, with 34% of shoppers finding a private brand in their order history versus 31% for a national brand; 36% have a private brand saved as a favorite versus 29% for a national brand; and 28% find a private brand via a referral section in a search such as a “you may also like” recommendation, compared with only 18% for a national brand.

Finally, the report noted that three-fourths of those surveyed found private brands met expectations or exceeded them over the past year when looking at online grocery, but found that private brands face a challenge in e-commerce in that most of the industry hasn’t reached a point of differentiating private-brand KPIs between online and in-store to truly gauge how well private brands are performing online. The report found 81% of those surveyed said that they don't measure private-brand KPIs differently for online versus in-store.

This is the second report from FMI this year under its "Power of Private Brands" series. Earlier, the association released a report that highlighted the importance of  suppliers and retailers working together.

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