Forty-one percent of shoppers are buying more private brands, report finds

Dive Brief:

Private brands purchasing is growing amid rising grocery inflation, with 41% of shoppers surveyed this spring saying they bought more store brands than before the pandemic, according to a new report from the Food Industry Association (FMI).
Among customers who said they bought more private label products, more than three-quarters (77%) said they plan to continue that add store brands to their carts in the future, according to FMI’s new store brands report.
While value and lower cost continue to attract shoppers to private brands, factors such as quality and taste are also encouraging customers to purchase them, FMI said.

Dive Insight:

While price has long incentivized customers to grab store brand items and continues to be a driver as high inflation squeezes consumers’ wallets, FMI’s newest report notes that other attributes are getting customers’ attention.

“When asked about 14 product attributes, shoppers identified an average of four reasons for choosing private brand products. Clearly shoppers’ interest in private brand products extends beyond just price,” FMI’s Vice President of Industry Relations, Doug Baker, said in the press release.

Less than 2% of shoppers said the only reason they purchase private brands is because other products weren’t in-stock, Baker noted.

The report is based on an online national survey of 1,039 U.S. adult grocery shoppers in March.

Shoppers who said they are buying more private brands chose value (63%) and price (55%) as their leading reasons for doing so. But they also noted that quality (43%), taste (42%) and availability (35%) are motivating factors, underscoring the high expectations consumers have for store brands these days.

Sixty-four percent of shoppers overall said that quality is a key determinant when picking out private brands, compared to 66% who said the same for national brands. Seventy-eight percent of consumers said taste is an important factor when buying store brands as well as national brand products.

“When it comes to taste and quality, shoppers clearly see private brands as a good option, on par with national brands,” Baker said in the announcement.

Other attributes that are drawing in shoppers to purchase more private brands include meeting meal planning needs (24%), fitting health needs (20%) and that products just “looked interesting” (20%). Twenty-three percent said the ingredients were attractive to them, prompting them to buy more products.

The increased purchasing of private brands follows FMI’s findings last summer that more than 90% of surveyed food retailers and manufacturers were planning to significantly or moderately ramp up their private label efforts in the next two years.

This year, retailers have announced significant developments in private label. Kroger, which has become a store brands powerhouse, said in its most recent earnings call that same-store sales of private label increased 6.3% during its first financial quarter. West Coast grocer Save Mart said it plans to roll out “hundreds” of new private label items each year, while online startups like Gopuff and Misfits Market have introduced store brands to their assortments.

Grocers can also improve their online merchandising strategies to give their own brands a boost, FMI noted. The trade group, which has pointed to omnichannel shopping as a continuing trend for food retailers, has urged grocers to give private brands better placements on their homepages, utilize banner ads and other promotions, and improve their product listings.