We’ve been reading a lot lately about stores cutting back on national brands to make room for more private label goods. And perhaps the greatest impact will be that made by Wal-Mart. When one manufacturer generates a significant portion of your annual sales, it becomes a bit worrisome, to say the least.
But is this a long-term trend, or a short-term reaction to our current economic situation? The current private label boom can be directly attributed to the economy. Food prices went up…personal finances went down. We all looked at our own carts and said, “Well, maybe we’ll try the store brand this week.” I know I did.
There are stores dedicated to private label brands – Loblaw’s No Frills, Trader Joe’s and Aldi. But the idea of entire sections in traditional markets, converting to private label, may be a bit much for consumers to handle.
There are just some loyalties that consumers are not willing to give up. You know what brands you cannot live without. Personally, I make no exceptions when it comes to my favorite peanut butter. If a store is out of stock, I’ll go to another. And at our Innovation Roadshow®, keynote presenter Doug Palmer of A&P noted a store brand laundry detergent that beat the brand-name leader in blind tests, but couldn’t keep up in sales.
Our favorite brands aren’t going away. They’re in for the long haul. But it will take some time and recovery to win back customers that have strayed in favor of lower prices. In the meantime, some U.S. manufacturers are looking to fuel growth with emerging overseas markets.
But that doesn’t mean an end to private label either – far from it. Private label brands have won over unbelieving consumers with quality and price. Moving forward, competition between the two will be intense, as national brands fight for space on the shelf.