Store brands have come a long way. Over the past several years, retailers have invested in quality improvement, product and packaging development, and marketing their store brands, making them one of the few bright spots in the current retail landscape. The Nielsen Co. research shows that store brands represented 21.8% of unit volume in 2009 while only comprising 10% of items in stores.
In contrast, economy national brands made up 21.3% of sales, while taking up 29.7% of items in stores. Lisa Rider, Vice President, Product Leadership noted that consumers, who might have thought twice about including store brands on their shopping list years ago, now regularly purchase store brands, seeing them as a good value for certain grocery and household goods. The recent surge in store brand sales has a number of retailers wondering what’s next. What will the future hold for store brands in the U.S.?
To see the future of U.S. grocery store brands, we need look no further than Europe, Rider said. Thanks to massive consolidation among retailers and early investment in store brands, some European retailers already report over 40% of store sales coming from store brands, according to Europanel.
Consolidation has enabled companies to invest in product innovation, consumer research, and marketing, all of which has contributed to strong store brand growth. In comparison, the retail universe in the U.S. is much more fragmented, and the most successful retailers tend to have 20–30% of sales coming from store brands, highlighting a significant opportunity for growth.
Examining what European retailers have done and are doing to drive growth can provide clues to what could be in store for the American market.
The full article available at Food & Drink.