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Allure of Store Brands Remains Strong

August 1, 2012

In an Accenture survey, 50% of consumers buy store-brand products because they perceive the quality to be just as good as the brand-name equivalent.
A new study from Accenture shows that the threat store-brands pose to brand name products is not going away. Nearly two thirds (64%) of shoppers surveyed by Accenture admitted that their grocery carts were at least half full of store-brand products, and 39% said they have increased their purchase of store-brands in recent years as a result of the tough economic times.

The Accenture study of 500 US consumers found that price remains the key factor in the majority of store brand purchases. According to the study, 66% of shoppers said they buy store brands because they are cheaper.

Also, while 87% of shoppers said they would buy more brand-name products if they were offered at the same price as the comparable store brand, more than half (51%) said that it would take a permanent price reduction of the brand name product—to the same price as the store brand—to persuade them to return to purchasing the brand name product.

According to Accenture, there is growing perception of trust, quality and preference for private label products, and that should be of most concern to consumer goods companies that are competing with stores for the same shelf space. Half of consumers surveyed buy store brand products because they perceive the quality to be just as good as the brand name equivalent, 42% buy a private label product because they “trust” that particular store’s brand, and 28% simply prefer the store-brand product to the brand name product. In fact, only 9% claimed not to buy store brands because they felt that the quality or taste was inferior to the brand-name product.

“Consumer goods companies must respond to the threat of increasing competition from store brands as market position and profitability are at stake,” said Bob Berkey of Accenture’s Consumer Goods & Services practice. “Extreme competition between retailers and consumer goods companies can result in inefficiencies and waste for manufacturers and retailers, and undifferentiated products for the consumer. Consumer goods companies must develop a balanced strategy of collaboration with retailers in some areas and competition in others. This new dynamic—where competitors become partners—will require a considered focus from manufacturers.”

Nearly half (48%) of shoppers said that stores now offer a greater number and variety of store brand products, and more than one third (36%) consider store brand products as simply another brand on the shelf.

As further evidence that better selection, trust and preference are driving sales of store-brands alongside price, 77% of shoppers said they would not decrease the amount of store brand products they buy even if their disposable income were to return to the same level as it was before the economic downturn, according to Accenture.

“Undoubtedly, uncertain economic times are a major factor in the growth of private label, but it is the increased sophistication of stores’ own brands that has helped them retain customers,” Berkey said. “Consumer goods companies must create a clearly defined private label strategy that understands the unique attributes that drive preference and loyalty in their consumer, engages with them across multiple channels and creates an excellent customer experience.”

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