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Thursday, April 22, 2010

Store brands enjoy the dividends of frugality

And they might not be just for groceries anymore.

Evidence suggests that use of private-label (or “store brand”) goods is one of the recession-induced behaviors that is likely to remain strong long into the recovery.

In a recent Media Post Marketing Daily article, a survey (of 800 supermarket shoppers) by GfK Research indicated that 62% of consumers intend to purchase more private-label products going forward. 43% of those polled said they had recently ditched a national brand in favor of a generic purchase… up from 35% a year ago.

Another story focused on the topic of store brands just last week, this time in the Research Brief
from Media Post
. One conclusion drawn by the article is that the idea of "lesser performance" by store brands, compared to name brands, is beginning to fade.

Implications: What interests me about this issue is the idea that store brands are no longer limited to backaged goods. Recently, I’ve noticed greater creativity and diversity when it comes to the idea of “store brands.” For example, I love to go camping and kayaking. So over the past year or so, it’s been easy to notice the new “store brand” at Dick’s Sporting Goods: Field and Stream. Specifically, I’ve been tempted by a Field and Stream hybrid solo canoe… and I’ve studied it closely enough to know that it was actually manufactured by Old Towne, a reputable boat maker. (I already own a larger Old Towne.)

If you abide by the laws of supply and demand, you will likely be giving your private-label goods a higher profile than you did before the recession… at least for the foreseeable future. But I’m wondering what other “next creative steps” might be in the realm of store-brand merchandise.

For smaller retailers, would it make sense to form (or grow their) buying groups to create greater leverage with manufacturers, so that more and diverse private label goods can be offered, even among smaller stores?

For packaged goods companies, does it make sense to partner with certain retailers to focus on specific products that can be sold as if they were store-brands? (For example, “Bounty, now the official store-brand paper towel of ____ supermarkets. And that means greater value for you.”)

[My thanks to friend and fellow trend watcher JoAnne Naganawa in Seattle, for emailing the Media Post story to me!]

Mike Anderson

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