Consumers seek savings with private brands

The AWG Partner Gateway (APG) is the best-in-class information sharing portal that provides reports, analytics, forecasts, and automated processes based on AWG’s one source of truth database. It has changed the way AWG and its vendor partners do business, providing organizational and operational productivity. APG was launched in partnership with Circana, a CPG market researcher, that continues to power the platform. Over the next four pages, you’ll see their insightful research and recommendations that are helping to make AWG member retailers successful.

MEMBER RETAILERS SHOULD MEET THEIR NEEDS WITH AWG BRANDS 

Inflation has slowed in recent quarters; however, it is important to keep in mind that consumers are still facing close to 30% higher prices compared to 2019 and wages that have not kept pace.

PRIVATE BRAND CONSUMERS & PRODUCTS 

Connecting consumers to the right private brand products is key. Circana’s review of demographic cohorts found 35% of private brand Food & Beverage unit purchases come from households with children, while 36% of private brand Food & Beverage unit purchases come from Millennials and Gen X households with no children.

Consumer demographic cohorts show differences in private brand purchasing. Gen Xers with no kids increased household penetration and the number of exclusive private brand buyers in Refrigerated Side Dishes, Frozen Seafood, Hot Cereal, and Frozen Plain Vegetables. Meanwhile, Millennials with no kids increased household penetration and exclusive private brand buyers in Refrigerated Entrees, Frozen Plain Vegetables, and Butter/Butter Blends. Knowing who your consumer is and what they need is important when selecting products to sell.

Circana’s October 2023 Store Brands Thought Leadership survey found consumers tend to consider private brands as good as or better than national brands, particularly for food and beverage and over-the-counter medications.

Retailers can leverage consumer confidence in private brands to their advantage, especially in products where consumers view private brands to be of similar or superior quality to national brands. Use knowledge of consumer demographics to influence private brand assortment, ensuring consumers find products that match their needs. 

HOW MEMBER RETAILERS CAN GAIN LONG-TERM, PROFITABLE, CONSUMER LOYALTY 

Private brands are a retail powerhouse, with more than $217 billion in annual U.S. total store sales. According to Circana, over the latest 52 weeks (ending 03-24-24), U.S. Multi Outlet (MULO) Food and Beverage private brand dollars increased +2.9%, while units grew +1.8%. This is compared to national brand dollar growth of +2.2% and unit decline of -2.1%. The culmination of retailers’ strategic focus on private brands, while consumers look for ways to combat inflationary concerns, support private brands growth.

Private brands, Total U.S. MULO Food & Beverage, Price Per Unit increase slowed to a decline in recent quarters, helping boost private brand unit sales, while national brands recently started to see positive year-over-year unit growth despite slower, yet persistent, price per unit increase. Total U.S. MULO Food & Beverage private brands have continued to offer consumers a lower price per unit compared to national brands, even when private brands pricing was growing at a faster rate than national brands.

Best in class private brands are developed and advanced through strategic focus. Private brands such as AWG‘s Always Save®, Best Choice®, Clearly by Best Choice™, and Best Choice® Superior Selections®, are treated like national brands with investment in price, quality, innovation, differentiation, and marketing support.

Best in class private brands focus on the consumer, developing offerings that meet consumer preferences that include organic, clean label, gluten free, sustainably sourced, and desire to enhance food experience, among others.

Through private brands, retailers gain long-term, profitable, consumer loyalty, not only to the product, but to the retailer. Retailers focused on private brands benefit from higher gross margins than national brands, residual sales, differentiated assortment in the marketplace, and control over product design, quality, and flavors.

Retailer strategic focus on private brands is driving consumer loyalty, share of wallet, and share of units, accounting for 26.4% share of U.S. Food and Beverage units sold year-to-date through Q1 2024, a +6 pt increase versus last year.

According to Circana, private brand unit share penetration increased in Q1 2024 across top unit selling Total U.S. Food and Beverage aisles, including Water (+2.0 pts), Frozen Fruit & Vegetables (+2.0 pts), Main Meals (+1.6 pts), Refrigerated Meats (+1.2 pts), and Paper Products (+1.0 pts), while Dairy (+293M), Main Meal (+159M), Baking (+102M), Refrigerated Meats (+80M), and Snacks (+70M) aisles grew the most absolute private brand units. Private brands grew units year-over-year in all previously mentioned Food and Beverage aisles, while national brands declined in all mentioned aisles except the Baking aisle, in which national brands only increased unit sales +0.2%.

PRIVATE BRAND IMPLICATIONS 

There is still much more room for private brand growth in the United States. Retailers can grow private brand sales by focusing on consumers and their needs. Retailers must continue to invest in innovation that supports their mission, meets consumer needs, and creates a point of differentiation. For instance, not all consumers are shopping for the lowest price point. Value, quality, or products that meet consumers’ unique needs, can be just as important as price to some consumers.

_{Circana transforms complexity into clarity. We are the leading advisor on the complexities of consumer behavior. Our unparalleled technology and complete view of the consumer inspire our clients to take action and unlock business growth. Circana is proud to partner with AWG.}