CHICAGO, Feb. 26, 2008 – According to a new study from Information Resources, Inc. (IRI), the leading global provider of consumer, shopper and market insights for the consumer packaged goods (CPG) retail and healthcare industries, nearly 75 percent of all U.S. consumers rate private label offerings as excellent in overall quality, with older and lower-income shoppers leading the way. The report also reveals that despite generally flat sales during the past few years, store brands are gaining favorability in key CPG categories, offering the potential of sizeable market share gains among lower-income shoppers.
The study, “The 2008 Private Label Report: Understanding Emerging Trends and Key Success Factors in Private Label,” provides advanced information for retailers and manufacturers through additional research components including the use of a new AttitudeLink™ panel survey that breaks down attitudinal differences among respondents across age groups and income levels.
“There is a growing revolution of value and consumer selectivity happening at our neighborhood grocery stores,” said President of IRI Consulting and Innovation Thom Blischok. “Once the low cost, lesser quality substitutes for name brand CPG items, private labels are quickly turning into innovative, top quality and good value additions to family grocery lists. It’s an emerging fact of life for retailers: the quality gap is closing and new consumer attitudes are changing the center store landscape.”
According to the IRI study, price alone is no longer the make-or-break proposition for customer selection of private label items that it once was. Quality, variety, packaging and the store’s reputation itself are now important contributing factors that determine the selection of a private label product.
“Price alone does not seal the deal,” said Blischok. “And, it is in this environment of refined consumer values and perceptions that retailers have the opportunity to expand household penetration and increase product usage.”
IRI findings show that several categories of CPG private label products are ripe for market share gains. Commodity-driven categories that are not dominated by a national brand and possess little need for innovation are showing increased favorability. These include staples, such as butter, pasta, milk and creamers, and paper ware products. Joining these are a variety of new private label entries demonstrating the consumer’s willingness to choose items that maintain or exceed quality expectations, regardless of the label. Among these developing growth categories are refrigerated entrees, skin care products, baby formula, tissue items and laundry detergent.
With price still a dominating factor, IRI information shows the target audience for private label CPG products remains lower-income shoppers. Compared with other consumers, lower-income shoppers rely considerably more on private label items across all 295 analyzed food, beverage and nonfood categories. In 2007, lower-income shoppers spent 17 percent of their overall CPG dollars on private label products, as compared to 15.7 percent and 13.7 percent for middle income and higher income, respectively. Yet, IRI analysis shows that despite the larger stake that lower-income shoppers have in store brand items, retailers are missing opportunities to tap into the growth potential of this market.
“There’s a huge opportunity for retailers who understand the power of private label offerings,” added Blischok. “Our micro-segmenting and cross-purchase pattern analysis of lower-income shoppers shows plenty of room for product expansion and a greater chance to gain market share across many key categories. By responding to consumer needs, especially young families who are looking for both quality and value, smart retailers can develop a whole new segment of brand loyal consumers who look for the private label first.”
The IRI 2008 Private Label Report is based on an extended analysis of consumer survey results, in-depth interviews with retail and manufacturer executives, and cross-channel private label performance data from IRI proprietary resources, including InfoScan™ and Consumer Network™ research platforms.
About the Report
The IRI 2008 Private Label Report provides a new perspective on private label offerings, uncovering emerging private label strategies and tactics from the viewpoint of retailers and manufacturers, as well as an updated look at how consumers are viewing private label products today. The report provides several key deliverables including:
- new insights into how consumers attitudes toward private label are impacted by shopper age and income levels;
- primary perspectives from retailers and manufacturers into what is working and what is not within private label innovation; and
- best-in-class case studies allowing retailers to compare and contrast their own private label approach.
For more information about the report, please contact Sean Seitzinger at 678-613-1427 or sean.seitzinger@infores.com. In addition, members of the Center for Retail Innovation team will be able to discuss the report and its findings during IRI Summit 2008 in the Innovation Showcase on March 3-5 at The Gaylord Palms Orlando Resort & Convention Center.
About Information Resources, Inc.
Information Resources, Inc. (IRI) is the world’s leading global provider of consumer, shopper, and retail market intelligence and insights, empowering consumer packaged goods (CPG), retail, and healthcare companies to grow their business profitably in a complex marketplace. Driving breakthrough growth in the industries it serves, the company’s portfolio of services, solutions, and technology enable leading retailers and their suppliers around the globe to see what they are missing, act faster with greater confidence, and win at the shelf. Ninety-five percent of the FORTUNE Global 500 in CPG and retail leverage IRI to power their business. For more information, visit: www.infores.com.
# # #
IRI CONTACTS:
John McIndoe
E-mail: john.mcindoe@infores.com
Phone: (312) 474-3862
Fax: (312) 474-2512
Shelley Hughes
E-mail: shelley.hughes@infores.com
Phone: (312) 474-3675
Fax: (312) 474-2512