An annual survey of grocery retailers & manufacturers finds that national brands have yet to recover share lost to private label foods, though the results show some rebound by the brands.[1]
Often cited was Wal-Mart’s decision to bring back national brands cut during its “Project Impact” rationalization drive. Cereal, carbonated soft drinks, laundry detergent, pet treats and the health & beauty categories were impacted and then redeemed. Some retailers said national brands were now pushing out PL products due to the advertising and marketing spends by the CPG houses.
One area where national brands have lost initiative is in service by cutting back after cutting back personnel. Retailers are refining their brands by offering four tiers of PL:
- economy
- national-brand equivalent
- organics
- specialty products
Half the retailers surveyed identified Walmart as the biggest threat to Center Store share. Dollar stores, limited-assortment discounters, club stores, drug stores, c-stores and natural retailers are also putting pressure on conventional grocery market share. Strategies for countering Wally World and other alternative retailers were dominated by price, while PL and value-added offerings like clubs, loyalty cards, targeted offers, and educational/nutrition programs supplemented cost-cutting.
Other ways of differentiating themselves from Walmart and other alternative retailers include improving shelf/store layout, updating product assortments, and the new loyalty marketing/customer outreach technology (especially digital couponing and social media). Over 83% of retailers surveyed say consumers are spending more on private labels, while only 3.7% say they’re spending less on store brands; 13% indicate the same spending levels as last year. To maintain this momentum, a majority of retailers will add specialty products, natural/organic, healthy reformulations (e.g., less sodium or no trans fats), ethnic foods, or an additional tier of an existing product. Shopper tactics for cutting costs include shopping multiple stores, stocking up on sale items, buy-one, get-one offers, coupons, private label substitutes for national brands, and the tried-and-true buying in bulk.
New social media used by stores include Facebook, Twitter, blogging, and Groupon, though nearly 41% of retailers have failed to try social media. Digital and mobile coupons luring retailers who like the fact they can reach shoppers while they’re shopping. Two-thirds of retailers offer Internet coupons for printing at home, while 18.5% use digital coupon hubs that pool manufacturer offers. Nearly 13% will download Internet coupons to loyalty cards or will link digital coupons to loyalty cards, some sending out a text message that must be presented to the cashier at checkout. Fears of counterfeiting and misuse are holding many retailers back from embracing the new technology.
[1] Source: Supermarket News’s 7th annual “Survey of Center Store Performance.”
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