Progressive Grocer - November 2008 - (Page 32)

PRIVATE LABEL What economic downturn Sales of private label are not only resistant to the effects of today’s economy, they can thrive in it—especially for grocers who carefully study trends, and innovate. By Joseph Tarnowski I 32 f there’s one thing grocers can be happy about in today’s economy, it’s the growth of private label sales. Indeed, dollar sales of U.S. private label consumer packaged goods are up by 10.1 percent, accounting for $80.3 billion, according to data for the year ending Sept. 6, 2008 from The Nielsen Company. Unit sales, however, grew by only 0.4 percent in those 52 weeks, a signal that the segment’s success over that period might have been riding on higher unit pricing, rather than on substantial numbers of shoppers switching away from traditional brands. That would be a recipe for a short-term opportunistic spike, surely, but not for a long-term growth strategy. Private label categories: Sales amounts and category share Tom Pirovano, Nielsen’s director of industry insights, recOf the food categories that generate the most private label dollars, milk leads in private ognized the import of these trends early on, and brought them label sales, and eggs lead in share. to light during Nielsen’s annual Consumer 360 conference in Category 52-week dollar sales Change vs. year ago Share of category Phoenix this past June. Milk $8.1 billion 15% 60% “When private label dollar share started to spike, it appeared Bread and baked goods 3.8 billion 9 27 that shoppers were shifting to store brands in order to save Cheese 3.6 Billion 20 35 money,” said Pirovano. “That’s always been the conventional Eggs-fresh 2.5 billion 32 72 wisdom during economic downturns. Digging beyond the numbers, however, it’s clear that private label unit share is Fresh produce (UPC-coded) 2.2 billion 17 16 essentially flat. Higher prices in commodity categories like Deli (UPC-coded) 1.5 billion 12 26 eggs, milk, and cheese are driving private label dollars, not Packaged meat 1.4 billion 2 13 consumers deserting traditional brands.” Unprepared meat/seafood-frozen 1.3 billion 7 43 More recently, Pirovano has detected positive movement in Bottled water 1.2 billion 6 22 units. In last month’s Consumer Insights from Nielsen, he admits Vegetables-frozen 1.2 billion 5 33 that private label unit sales have begun to grow, which means that SOURCE: NIELSEN STRATEGIC PLANNER, 52 WEEKS ENDING SEPT. 6, 2008 shoppers could indeed be starting to migrate toward store brands • Progressive Grocer • November 2008 A H E A D O F W H AT ’ S N E X T because of the perceived savings they offer. Some store-brand market watchers suggest that, despite the opportunity that current economic conditions present, many grocers haven’t been actively and specifically promoting those savings. “Retailers aren’t doing anything overt to send the value message to shoppers,” says Brian Sharoff, president of the New York-based Private Label Manufacturers Association. “We haven’t reached the point where they’re saying, ‘Come into our store because [our store-brand] prices are cheap.’ Yet there have still been huge jumps in private label dollar sales.” While they may not be promoting value of their store brands per se, a number of grocers are employing their store brands to drive their value message overall, www.progressivegrocer.com http://www.progressivegrocer.com

Table of Contents for the Digital Edition of Progressive Grocer - November 2008

Progressive Grocer - November 2008
Contents
Front End
Nielsen’s Shelf Stoppers/Spotlight
Market Snapshot
Lempert Report
Independents Report
Cover Story: Store of the Month
PG Industry Event
Private Label: What Economic Downturn?
Private Label: Critical Mass
2008 Category Captains Awards
Beverage Alcohol
Meat Snacks
Meat Trends
Produce
Holiday General Merchandise
Equipment Innovations

Progressive Grocer - November 2008