Customers Gravitate Toward Private Label

A sluggish economy means customers continue to pinch pennies by turning to private label options and shopping less frequently.

A new report by Acosta Sales & Marketing, a sales, marketing and merchandising company, found grocery shoppers are spending less, making fewer store trips, searching out deals and discounts, and buying more private label products, Advertising Age reported.

The slow economy and high gas prices are to blame for shoppers’ penny pinching habits.  Ascota, which conducts its survey, called “The Why Behind the Buy,” twice a year from a panel of 8,500 U.S. households, noted only 23% of customers expect to spend more in 2011 compared to last year, while 13% are cutting their budgets and 63% plan to spend about the same.

The average monthly grocery bill has fallen to $279 per household in February, down from $298 the previous year, according to the survey, even as marketers have increased prices to combat rising commodity costs, Advertising Age reported.

As prices rise, store brands are growing more popular with consumers. The survey found 54% of shoppers buy “a lot” of store brands to save money, while 41% said about 50% of all purchases are store brands, and almost 30% of shoppers plan to continue purchasing store brands even if their financial situation improves.  Customers between the ages of 18 to 44, the prime c-store demographic, noted private label is “a better value” than branded products, compared with 46% of shoppers 45-54 and 47% of those 55 to 64.

Private-label sales grew 1.7% during the 52 weeks ended May 14 and make up 17.6% of all store purchases, up from 16.9% two years ago, according to The Nielsen Co., while sales of branded goods fell 1% in the last year.

Some categories where private label purchases were most popular included butter and margarine, cough and cold remedies, and pain remedies, according to Nielsen.

But private label brands are pushing into categories where they have not traditionally done well, including the beer category, Advertising Age noted.

Acosta found that the average customer begins reducing grocery trips once gas hits $3.70 per gallon.

Source: Advertising Age


Speak Your Mind