And by the numbers, there's still some momentum behind private brands. In accordance with IRI, the latest "Power of Private Brands" report observed that private-brand sales outperformed national brand sales early on in the pandemic (up more than 15%), but after May 31, national brands outperformed store brands by a little more than 2%. Chicago-based IRI projects $15 billion to $20 billion in private-brand sales growth overall in 2020, a .6% gain in share.
Additionally, the latest report found that 33% of American consumers surveyed said they'll purchase “more private brands than before the pandemic,” and 13% said they'll purchase “much more.” Executives at food retailers feel the same, with 93% of them saying that they believe store brands to be “extremely or very important.”
“We’re encouraged that our consumer research suggests one-third of Americans expect to purchase more private brands going forward. We’ll need to maintain momentum for more meals shared at home with private brands, which is supported by the c-suite suggesting major investments in private brands in the future,” Doug Baker, VP of industry relations at Arlington, Virginia-based FMI – The Food Industry Association, told Progressive Grocer sister publication Store Brands.
“Both economic and supply-chain challenges have influenced the power of private brands during the pandemic,” Baker said. “Regarding the economy, we often witness upswings in private-brand purchases during recessions, and the current state of the economy would suggest consumers are seeking out ways to expand their food dollar. In addition, COVID-19 has affected grocery prices more than nearly any other category of consumer spending, so food prices also play a significant factor for budget-conscious shoppers, supporting store brand selection. As a bright spot for brand owners during the pandemic, out-of-stocks did encourage consumers to try brands that they might not have in the past, including private brands.”
As for private-brand opportunities going forward, the report found more than 83% of food retailer executives believe fresh foods, such as bakery and deli, represent a major opportunity for private brands.
Retailers will continue to emphasize e-commerce, too. The report noted that 76% of retailers find home delivery, click-and-collect services and e-commerce a “major growth opportunity.” Lastly, to help grow private brands, nearly 70% of the retailers surveyed said that they may “increase the number of suppliers” to diversify supply.