Wal-Mart Private Brands Awareness High: Study

NEW YORK -- In a development that likely will give packaged goods marketers little comfort, a new report says that consumers are warming to Wal-Mart's private label brands.

The report, titled "Private Label from a Consumer Perspective," will be released this week by The Hartman Group, a Bellevue, Wash.-based marketing research firm that surveyed 1,048 consumers online via Hartman Interactive.

"While clearly other results in this study point to the success of other retailers, we are struck by the magnitude of mind-share Wal-Mart appears to hold in shoppers' minds when it comes to awareness of private label brands and retailers," the report noted.

Packaged goods firms are well aware of that power. In July, Coca-Cola disclosed in a lawsuit filed in Atlanta that it changed its distribution of Powerade because it feared if it did not, Wal-Mart would come up with its own, competing version of the beverage.

Five of the top 10 "likely to purchase" private label brands are managed by Wal-Mart including: Great Value, Equate, Sam's Choice, Wal-Mart and Member's Mark (Sam's Club), per the study. Overall, the private label business accounts for 15 percent of all U.S. retail sales, with food garnering the greatest share at 19 percent. Between 1997 and 2005, store brand sales were up 64 percent versus 30 percent for major label competitors, per ACNielsen.

The survey comes after Disney joined the private label ranks when it announced it was partnering with the Kroger chain to launch more than 100 Disney-branded products to be sold as Kroger's kid-focused private label (see Brandweek, July 24).

In the survey, Kroger's store brands came in second after Wal-Mart's, followed by Target, Albertsons, and Safeway, respectively. Yet the study suggests that while consumers are primed for high-quality private label products, they are also clamoring for relevant product and retail shopping experiences.

"While traditional private label channels have strong associations in the minds of shoppers, they really think the highest quality store brands are sold in those stores that offer something beyond the ordinary," said Laurie Demeritt, Hartman president/c.e.o., who cited Trader Joe's and Nordstrom as providing a quality experience coupled with quality store brands.

Among other key findings:

-- While 82 percent of consumers believe store brands have closed the gap with national brands, 90 percent are not aware of stores like Trader Joe's that are dedicated solely to selling their own branded merchandise.

-- There are opportunities for retailers to win over private label skeptics who think they're "cheaply made" (26 percent), don't like the quality (21 percent), won't compromise on quality (20 percent) and don't like how they (foods/beverages) taste (20 percent).

Categories like health and wellness are not difficult sells for private label, though consumers said retailers need to do better at marketing and promoting of store brands.
-- from Brandweek, a Progressive Grocer sister publication
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