Brands vs. Private Label (Who wins?)
02/21/10 11:37 AM Filed in: Private
Label
"When people start feeling economic stress, they tend to trade down," said Dennis Lombardi, executive vice president at WD Partners, a food consulting firm. "When they lose their job, they trade out."
The
postrecessionary consumer is one that is “still concerned about
value. So for her, the habits she formed during the last economic
recession will stay with her,” ConAgra CMO Joan Chow said. “We’re
seeing the consumer is still [making the choice] between private
label and brand-ed products.”
What essentially has happened is that people have tried private label products and they like them. Private label packaging and quality is much better and we're even starting to see some premium private label brands. It's difficult for CPG managers to look at the private label threat competitively when there are so many changes going on within the marketplace.
Consumers are tired of what's going on in Washington and what's going on with "big business". They are becoming smarter everyday and know that often the difference between a branded product and private label is the advertising. To them ads don't mean anything anymore because way too many brands are only interested in selling them not engaging with them as people.
As the economy improves the brands that stand to win customer back are the brands that offer consumers more than value, they offer them a chance to "treat themselves". I'm talking about items like ice cream and other indulgence foods.
Consumers have gotten used to using private label products and seeing smaller grocery bills and they could spend a lot more but why should they ? Not unless brand make the connection emotionally and treat consumers like valued customers not numbers on a market share chart.
What essentially has happened is that people have tried private label products and they like them. Private label packaging and quality is much better and we're even starting to see some premium private label brands. It's difficult for CPG managers to look at the private label threat competitively when there are so many changes going on within the marketplace.
Consumers are tired of what's going on in Washington and what's going on with "big business". They are becoming smarter everyday and know that often the difference between a branded product and private label is the advertising. To them ads don't mean anything anymore because way too many brands are only interested in selling them not engaging with them as people.
As the economy improves the brands that stand to win customer back are the brands that offer consumers more than value, they offer them a chance to "treat themselves". I'm talking about items like ice cream and other indulgence foods.
Consumers have gotten used to using private label products and seeing smaller grocery bills and they could spend a lot more but why should they ? Not unless brand make the connection emotionally and treat consumers like valued customers not numbers on a market share chart.
