National Brands Remain Critical for Retailer Success

Acosta study finds strategic mix of both national and private label brands are key for the most successful retailers.By WGB Staff on Jun. 06, 2018

Photo courtesy of PixabayAn effective brand strategy plays an increasingly strong role in sustained success for retailers, according to top-line findings from Acosta’s newly released Why Brands Matter report, which details the importance of national and private brands and their impact to shopper purchasing habits.

“Brands are the fuel that powers shoppers to make more trips, spend more per trip and stay loyal to products and channels,” John Clevenger, managing director and SVP of Acosta, said in a statement. “National brands continue to dominate, with a worth of over $558 billion in 2017, compared to $124 billion for private label brands,” which are typically positioned as lower-cost alternatives to national brands.

Citing a study amassed by more than 100 retailers, Clevenger said retailers that are growing both national and private label brands “are experiencing the best overall growth, proving that a strategic mix is key.”

Acosta’s2018 Why Brands Matter reporttakes an in-depth look at the value and current state of national and private label brands, highlights of which include:

Why Brands Matter

While there are a variety of reasons shoppers may choose a private label brand, cost savings is the primary driver. Further, while many shoppers view purchasing private label brands (or store brands) as a compromise, shoppers overall view national brands to be superior to their private label brand counterparts in most categories. For instance:

• Shoppers felt “name brands are better than store brands” in 41 out of 53 categories.
• Shoppers felt “name brands and store brands are ‘about the same’ ” in 12 out of 53 categories.
• Shoppers felt “store brands are better than name brands” in zero out of 53 categories.

Shopping trips driven by national brand purchases are more valuable than private label brand trips on average by 65%.

The top three reasons shoppers said they purchased national brand products while grocery shopping were:

• “National brand products are higher quality in taste and/or performance.”
• “I can get better deals on national brands (through sales/coupons).”
• “I trust national brand products more.”

Not All Categories Are Created Equal
Generally, the more personal, innovative and differentiated the category, the more likely a shopper will choose a national brand over a private label brand. Several of the categories for which shoppers indicated they purchased national brands “exclusively” or “mostly” are personal care products used on or applied to the body. Further, nearly all of the categories for which shoppers reported “exclusively” or “mostly” selecting private label brands tend to contain staple items that are consumed.

The Value Channel Is Growing

• While the value channel has a large emphasis on private label brands, this isn’t necessarily what is driving shopper traffic. Shoppers reported that the highest influencers driving them to the value channel are best everyday prices (49%), better value for their money (47%) and cost savings/help with budget (45%).
• Despite its growth, the value channel has limited appeal among a limited base of fans. Shoppers that frequent the grocery and mass/super channels find that value retailers fall short in fresh foods, convenience and promotions.

“To craft the best possible brand strategy, use research and analysis to help strike the right balance with national and private label brands in each department and category,” Clevenger said. “A clear takeaway for retailers is that they should understand the different roles national and private brands play. Manufacturers should concentrate on telling a compelling brand story and selling their expertise and understanding to build a brand connection with shoppers.