Unwrapping private label in the great “brand-scape”
The growth of private label products is one of the most significant trends in the consumer goods industry today. As Kantar’s data shows, private label products have been growing faster than branded products overall. Of course, the trend towards private label products is not new, but in recent years, it has accelerated. Kantar data shows that private label innovation has grown strongly year-on-year (2022 vs 2021), outpacing branded NPD gains. In fact, of the top 100 manufacturers, only 18 had more than 5% of total sales come from genuinely new products. This presents a challenge for branded products, as they struggle to compete with the rising popularity and quality of private label products.
Top five manufacturers for new products
These major manufacturers were the exception rather than the rule. But why are shoppers turning to private label products? With inflation rising and many shoppers struggling financially, the price difference between branded and private label products becomes more pronounced in their decision-making. This, coupled with the fact that private label products are often perceived to be just as good, or ‘good enough’ in quality as branded products, makes them an attractive choice for price-conscious shoppers.
Interestingly, while struggling shoppers do prefer private label in a rising number of categories, they still show a relatively strong preference for branded NPDs if they can justify the purchase. While the struggling group is looking for ways to save money, they still want to feel good about the products they are buying. They may be turning to private label products for everyday essentials, but they are still interested in branded products that provide an emotional connection or a sense of luxury. The trick for brands is to not overly rely on their brand resonance as price still matters.
Retail realities
But the view is different depending on the retail environment, which raises the important question of assortment and the relationship between retailers and brands.
The success of branded products varies across different retailers, as shown in the table below. Asda is the only major store environment where branded innovation has grown vs private label. The table shows the percentage change in 2022 branded spend vs. 2021 by supermarket retailer.