Store Brands Booming in Tough Economy
The popularity of store brand products is threatening the future of brand name products, according to a new study by Accenture.
Two-thirds (64 percent) of grocery store shoppers buy store brand products, and 39 percent of shoppers have increased their store brand purchase behavior in recent years due to the weakened economy, the study revealed.
The primary factor in store brand versus brand name purchases is price: 66 percent of shoppers say they buy store brand products because they’re cheaper, while 87 percent would purchase more brand name products in favor of comparable store brands if they were the same price. And more than half of those surveyed (51 percent) admitted that purchasing brand names would require a permanent price reduction equal to that of the equivalent store brands.
“Consumer goods companies must respond to the threat of increasing competition from store brands as market position and profitability are at stake,” said Bob Berkey, from Accenture’s consumer goods and services practice.
Consumers are drawn to store brands in large part due to perception, notably the extent to which they trust the brand and the perceived quality of the brand, as well as simple preference. Half of the consumers surveyed believe the quality of store brands to be equal to that of brand names. Forty-two percent of shoppers buy the generic product because they trust a particular store’s brand, while 28 percent simply prefer the private label product. From those surveyed, only 9 percent believe brand name products are actually superior to the equivalent store brand.
Almost half of the shoppers surveyed believe that stores have enhanced the selection and appeal of their private label products, and 77 percent said they would not change their store brand purchase behavior even if their disposable income improved.
“Undoubtedly, uncertain economic times are a major factor in the growth of private label, but it is the increased sophistication of stores’ own brands that has helped them retain customers,” Berkey said.
Accenture conducted its survey of 500 U.S. consumers in May and June 2012.