Galloping Growth for Store Brands

New SymphonyIRI annual research, "Understanding & Mitigating the Private-Label Threat," provides a detailed perspective on the store brands market and is tailored for national brand manufacturers. And the current issue of SymphonyIRI Group's monthly Times & Trends, "Store Brands: More Than Just a Safe Harbor in Turbulent Times," provides manufacturers and retailers insight into current and emerging store brand trends as well as influencing factors that are helping to define the CPG industry of tomorrow.

"Store-brands growth galloped during the recession as shoppers revised their definition of value to be much more focused on price," said Sean Seitzinger, senior vice president of consulting and innovation for SymphonyIRI. "Today, growth continues at albeit a slower pace as the economy recovers, but store brands are here to stay and are gaining in importance. As retailers accelerate investment in aggressive assortment, product and promotion strategies, we expect store brands to play a critical role in offering value and differentiation."

Among the principal findings of these new reports:

• Dollar and unit share each grew 0.2 share points, to 18.3% and 23.1%, respectively, in 2010 over 2009; contrasting with growth of 1 point and 1.3 points in 2009 over 2008.
• Dollar and convenience stores enjoyed the most rapid unit share growth of 1.1 points and 0.9 points, respectively.
• The healthcare department witnessed the most significant store-brand growth in both dollar and unit share of 2.6 points and 1.7 points, respectively.
• On average, store brands offer a savings of 30.5% as compared to national brands, but average price gap varies widely across departments. These savings range from as low as 7% in fresh/perishable products to nearly 61% in beauty and personal care products.
• Store-brand sales tend to be more concentrated versus the CPG industry as a whole. One-third of shoppers account for 62% of store-brand sales, and the top 50 categories of store-brand products account for more than two-thirds of store-brand sales, versus 59% for the CPG industry as a whole.

  Both reports outline important strategies for manufacturers to consider, among these:

• Continually identify and assess brand-specific opportunities, such as optimal price gaps versus store brands and means to protect and grow share in categories where there is a strong store-brand presence through value-oriented promotions.
• On an ongoing basis, redefine pricing strategies to ensure alignment against the needs of key consumer segments, invest in product, packaging and promotion innovation across key categories, and implement highly targeted and affordability-oriented marketing campaigns where store brands exhibit the greatest threat.
• Implement metrics to monitor actual versus planned impact of store-brand related initiatives.

In addition, the "Understanding & Mitigating the Private Label Threat" research includes a section devoted to specific-store brand mitigation strategies as well as provides multiple case histories.

The Times & Trends report also offers a section on recommended retailer strategies, which include:

• Continue to understand core shopper needs and align new-product strategies accordingly; tailor offering at the market level, while supporting store brands with consumer-centric and highly integrated marketing campaigns.
• Evaluate feasibility of multi-tier offerings across key categories and product lines, review pricing strategies to ensure alignment with store goals and analyze product development best practices across departments to identify low-cost innovation opportunities.
• As with manufacturers, retailers should test market product, pricing and promotional changes before and after rollout as well as track/benchmark store-level brand share shifts relative to national brands.

"Store-brand success moving forward hinges on real marketing prowess," said Susan Viamari, editor, Times & Trends, SymphonyIRI. "The need to understand and deliver against the most pressing needs of consumers is high. Those who do so effectively will be rewarded with share of wallet and, perhaps, true shopper loyalty." .

This month's Times & Trends: "Store Brands: More than Just a Safe Harbor in Turbulent Times," is a free report available from SymphonyIRI, the world's leading innovation partner that enables CPG, retail and healthcare companies to create and maximize new opportunities. The findings of this report were compiled based on information from SymphonyIRI MarketInsight and the SymphonyIRI Consumer Network. To download the special report, click here.

Chicago-based SymphonyIRI Group, formerly named Information Resources Inc. (IRI), is a global leader in solutions and services for driving revenue and profit growth in CPG, retail and healthcare companies. SymphonyIRI offers two families of solutions: Core IRI solutions for market measurement and Symphony Advantage solutions for enabling new growth opportunities in marketing, sales, shopper marketing and category management. SymphonyIRI solutions combine content, analytics and technology. SymphonyIRI helps companies create, plan and execute forward-looking, shopper-centric strategies across every level of the organization.