The Struggle for Your Dollar: National vs. Private Brands

The stakes are high as the power of retailers relative to their manufacturers continues to increase. Private brands are rapidly encroaching on the shelf space that was once dominated by national brands, thereby significantly gaining market share.

Recent innovations and improved quality in the private label arena have fundamentally altered the relationship between manufacturer and retailer. Retailers are building customer loyalty with their private label brand(s) not only by having lower price points, but also by adding intangible value such as better packing design, value-add promotion, advertising, etc.

According to an article in TIME magazine, this private brand revolution really took shape in late 2010, largely due to the economic recession. Surveys indicate that 93% of consumers changed their shopping habits during this time, and many of them did so by trying out more store-branded and private label goods. Today, over 77% of all consumers report scoping out both national and private brand products before making purchases.

The competition between national and private brands is particularly evident in grocery and drug stores. Here are a few notable statistics from a “Private Label” report conducted by the Integer Group in late 2012:

• Women are more likely to check out store brands. Nine in ten women look at both options before making selections.
• Generic health and beauty products? Fine by men. While 74% of women report a preference for name-brand health and beauty merchandise, just 56% of men say they like name brands better.
• Most importantly, brand name has lost value as an indicator of top quality. In 2010, 57% of consumers agreed with the statement “Brand names are not better quality.” In 2012, that figure increased to 64%.

With that in mind, let’s level out the playing field!

Information is power and is the key to the success of national brands’ ability to stand against their private label competitors. Manufacturers need to be confident that they are indeed receiving the visual share as well as the merchandise positioning and promotion from their retail partners. Unfortunately, this information is often ominous and incomplete, and the task of gathering the data can be a complex and arduous undertaking.

Therefore, manufacturers must arm themselves with the knowledge and analytics to have an informed conversation with their retail partners. They need to understand the following:

1. Merchandising as it relates to other brands, specifically private label, within each category of goods
2. Pricing and promotion of their competitors
3. Customer segmentation both for themselves and their competition

Once quantified and analyzed, this data is the foundation of a successful strategy to regain market share and remain competitive within the new retail landscape.

How do your personal shopping preferences measure up in the national versus private brand battle? Are there certain national brand items you’re more inclined to purchase, and vice versa?