Washington D.C. – The economic downturn has been very good to private label brands. According to the Private Label Manufacturers Association, consumers drove private brand sales to an all time high: in supermarkets, for example, private label sales accounted for over 23% of all units sold last year. With economic recovery stagnating, the cost-conscious consumer trend towards private brands appears all but certain to continue.
Private label brands are often perceived as a win-win offering as they offer great value to the consumer, and often an increased unit margin for retailers. Grocers such as Meijer and Kroger (registration required) have recently expanded their private label offerings looking provide increased assortments for the value-conscious consumer. Retailers such as Family Dollar and Dollar General, already benefiting from the consumers looking for cheaper grocery products during the recession, are quickly expanding their private brand offering as well.
As store shelf space is finite, many retailers struggle as to what degree to increase private label assortments at the expense of cutting name brand SKUs. The most advanced retailers are beginning to uncover that most profitably optimizing assortment mixes between national brands and private labels requires a nuanced understanding of basket behavior. (more…)