The Pandemic Private-Brand Opportunity

Retailer private brands have gained 75 million new fans during the pandemic, but the window for keeping those shoppers may be closing.

Chicago-based Information Resources Inc. (IRI) has estimated that private label sales of food and beverages are forecast to increase between $10 billion and $12 billion to $95 billion this year, due to pandemic-led demand. New data from Catalina's Buyer Intelligence Database, however, shows that some of these share gains have already disappeared. 

"The pandemic created a decade's worth of trial in a few weeks," said Wes Bean, SVP of Catalina's U.S. retail network. "As the predicted recession sets in, private brands need to start behaving like national brands, leaning into marketing across channels to promote the value of these products and the innovative portfolios they've developed. One-off campaigns won't win the day."

Specific types of shoppers with whom retail private brands have had big wins during the pandemic include:

• Families with young children
• Bakers and breakfast makers
• Natural and organic seekers

But these types of shoppers are gravitating back to some national-brand products like flour and pancake mixes. The biggest opportunity for retailer private brands lies with the natural and organic seekers who are changing their overall buying patterns. Catalina data shows that many "strong" and "very strong" seekers have been attracted to private brands for the first time.

"New shopping habits and tighter wallets require closer integration with an investment in marketing communication to drive loyalty with these new private-brand shoppers," Bean said. "This isn't a case of pulling out the 2008 recession playbook and hitting repeat."

According to St. Petersburg, Florida-based Catalina, here are five ways that retailers can act now to keep more of these private-brand shoppers:

• Think strategically about how marketing can improve their business across the store, not just with one-off campaigns for this month's new product.
• Start building effective one-to-one personalized conversations along the shopping journey. Don't rely solely on promotions and unnecessary discounts when data analytics can identify those willing to pay full price for the value that private brands represent.
• Remind new buyers of relevant private-brand products throughout a given portfolio. Now price, variety, cost and differentiation can better stand up to buyer demand with value that addresses their unique needs. All of that hard work has already been done.
• Set specific growth goals for each private brand that goes beyond just sales and sales share. Consider metrics like sales per trip and trips per household. Align marketing efforts to these specific goals.
• Seek the why behind the buy: What are the underlying household preferences and behaviors driving potential buyers' interest and repeat participation with attributes of a specific private brand?