Exclusive SG Study: Private Label Should Save More Money

February 03, 2010

t’s clear that consumers have upped their use of private label in many categories.

It’s clear that consumers have upped their use of private label in many categories. Prompted by the recession, people have switched in order to save money. But are they saving as much as they feel they should? Do they believe retailers are giving them a good enough deal to forgo the name brands they’ve used for years, and to trust retailers in the role of manufacturer? 

Where are the checks and balances for consumers – since chains certainly aren’t transparent about the methods they use to establish private label prices at retail?  At SupermarketGuru.com, we believe this trust issue will play a key role in whether or not consumers stick with store brands once the economy recovers.

In a new exclusive SupermarketGuru.com survey of consumers, an overwhelming 91% said they “think they should be able to save more when they buy a store brand.” 

Some 93% of respondents said they do buy store brands currently – and for nearly nine out of 10, they buy about the same as in previous years (44%) or more (42%). Their number one reason for doing so was savings (86%). 

How much do consumers think they save vs. a purchase of a comparable name brand? Just one out of four (25%) felt they save 26% or more dollars at the shelf.  For three-quarters of consumers, the perception is significantly less: nearly half (47%) estimated they save between 16% and 25%, and slightly more than a quarter (28%) estimated they save 15% or less.

It remains an open question whether this perceived price gap between name brands and store brands will appeal enough to keep people buying the store versions once they feel freer and able to spend more. 

By a wide margin, a majority of survey respondents (56%) said they think they save the most when they buy canned/jarred/boxed groceries. The next three responses were nearly identical: frozens (11%), health and beauty care (11%) and paper goods (10%), the survey data showed. Next: laundry (4%), produce (2%), fresh and prepared foods (2%), and pet care (1%).

When asked if they were generally satisfied with the quality of store brands, 72% said yes. While there’s room for improvement here, more than two-thirds (68%) still “bought store brands to serve to guests for the 2009 holiday season” – and 37% actually did this more in 2009 than in previous years, as the recession wore on.