Research Reveals The Growing Power of Store Brands

Research Reveals The Growing Power of Store Brands

Research Reveals The Growing Power of Store Brands

A recent survey conducted by Deloitte, a global professional services firm, shows the increasing popularity of store brands. The firm surveyed retail and consumer packaged goods (CPG) executives, retailers and consumers. They all agreed that store brands are here to stay. The majority of the executives believe that the market share of store brands will continue to grow.

 While CPG manufacturers and retailers agree on the continued growth of store brands, there is a huge difference in the perspective of the executives and shoppers.  For example, fewer than 20% of the executives that participated in the research believe that consumers think that the national brands also manufacture the store brands while 80% of the shoppers believe that most store brands are manufactured by the traditional national brands. The survey also revealed that 85% of the consumers said that they have found store brands that are just as good as the national brands, and thus, have no reason for switching back.

While price and performance are givens, the executives on both sides believe that consumers have some unique associations with national brands, such as innovation, while they readily associate taste and specific regional preferences with store brands. However, on factors like exclusivity, green (organic and environmentally friendly) and being supportive of local causes, both sides agree that consumers do not have a national or store brand specific associations.

It is not surprising that the executives believe that retailers concentrate on store brands, premium brands and building customer loyalty, and that CPG companies should be concentrating more on store brands. They also believe that CPG companies need to come up with retailer-specific portfolios and more low- end brands. In addition, most retail executives believe that national brands can increase market share by creating local variations to target specific regions, states and cities.

Deloitte suggested some strategies to help CPG companies in this changing environment. They include:

  • Stop reckless promotions
  • Shed homogeneity
  • Be irreplaceable

The study showed that almost half of the executives on both sides agree that working together may be the best way to win the wallets of the consumers.

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