Before the global pandemic, private labels represented 16% of the U.S. market. Since COVID that figure has rocketed up to 29%.
In Europe, private labels have gained market share too. In France, one of three products sold is a private label. In Italy, private labels gained 2 points in market share, and in the United Kingdom and in Germany, private label market share represents more than 40%.
So what exactly has caused this meteoric rise?
Two main factors are behind the increase.
Firstly, choice – or the lack of it. During the crisis many consumers were forced to turn to private labels when they found their favourite labels were out of stock.
Secondly, price. Uncertainty and lower purchasing power meant consumers were more open to exploring new ways to reduce their grocery bills.
As a result of the lockdown, this change in behaviour seems likely to continue. Trends show consumers are now more likely to eat at home more often and to continue to keep budgeting.
“5 Keys to Private Brand”, a recent study by Daymon, looks at how private brands can succeed in the ‘new normal’’ of a post-Covid world.
According to the study, store brands that want to be successful should follow these 5 key points:
Consumers might be budgeting but they are also looking to make their at-home meals more exciting. Private brands should innovate by expanding in high growth categories including everyday cooking and snacks.
Retailers can create easy to prepare meal solutions by either repackaging their existing products or creating new meal solutions by combining existing private label products and selling them together.
Post COVID-19, consumers’ lifestyles have changed. Birthdays, dinner parties and holidays will continue to be celebrated at home and this is a chance for stores to offer inspiration through their own brands.
Online shopping has seen significant growth since COVID-19. Private labels have traditionally got lost or been ignored in the digital space. Retailers need to change their habits and put their own private labels on the front line. Stores should dedicate more energy to their private labels so they come out on top in searches and are promoted on digital platforms.
Educate on Benefits
Consumer trends are evolving post COVID-19 and private brands should try to hold on to the consumers they won during the pandemic by communicating their brands’ quality and innovation, instead of marketing them as a low cost, value alternative to national brands.
Private labels that focus on these 5 key points can expect to increase sales, brand penetration – and customer loyalty.