Private label and coupons grip consumers, at least for now

Articles
February 16, 2009

Private label and coupons grip consumers, at least for now

It looks like this recession is changing grocery purchase habits more deeply than other tough times in recent memory. Two separate studies point out new heights of private label purchasing, and a warmer attitude toward coupon use—as consumers care less what others might think and care more about keeping their wallets from running on empty. In a poll of nearly 800 primary household grocery shoppers, done by GfK Custom Research North America for the Private Label Manufacturers Association, those who say they buy private label “frequently” has risen sharply to 55% from 41% in 2006 (Ipsos-MORI study) and 12% in 1991 (Gallup study). The report, Store Brands and the Recession, also found that 31% now “buy more store brand products” compared with one year ago. Three out of four (75%) say current economic conditions are “important/very important” in deciding to buy more private label. Nearly 50% say they expect to prepare and eat more meals at home, and 77% agree “store brands they buy are as good as, or better than, national brand products.”

It looks like this recession is changing grocery purchase habits more deeply than other tough times in recent memory. 

Two separate studies point out new heights of private label purchasing, and a warmer attitude toward coupon use—as consumers care less what others might think and care more about keeping their wallets from running on empty.

In a poll of nearly 800 primary household grocery shoppers, done by GfK Custom Research North America for the Private Label Manufacturers Association, those who say they buy private label “frequently” has risen sharply to 55% from 41% in 2006 (Ipsos-MORI study) and 12% in 1991 (Gallup study). 

The report, Store Brands and the Recession, also found that 31% now “buy more store brand products” compared with one year ago. Three out of four (75%) say current economic conditions are “important/very important” in deciding to buy more private label. Nearly 50% say they expect to prepare and eat more meals at home, and 77% agree  “store brands they buy are as good as, or better than, national brand products.”

For context on these findings, consider this quote from PLMA president Brian Sharoff in November 2008:  "An analysis of the past three U.S. recessions indicates that store brands make sales gains during times of economic weakness, but only hold onto those increases when high quality standards are maintained. In the 2001-2003 recession, PL's unit market share climbed from 20.0% to 21.8%.  In the 1990-1991 recession, unit share for retailer brands moved up from 17.6% to 20.0%. In both of those economic downturns, consumers tried store brands, liked them and stayed with them after the economy improved."
 
However, PLMA found quite different results in the 1980-1982 recession. PL market share climbed rapidly during that period, as retailers introduced many 'generic' lines with black-white packaging and low-quality ingredients. These gains were short-lived....[because] shoppers were disappointed with the product quality and soon switched back to their favorite national brands, the trade group noted.
 
SupermarketGuru.com believes PL might stick better this time because nearly eight in 10 consumers today perceive quality comparability with name brands.  One early sign: Nielsen reported that PL sales climbed 10% in supermarkets and 13% in drugstores during the past year (ended October 2008). Total PL sales in all mass-market retail channels now stand at $80 billion, up from $72 billion a year ago.

Meanwhile, coupon redemption is also up in this recession—all the way to nearly nine out of 10 U.S. households, which drive nearly nine out of 10 all-outlet dollar sales, says Nielsen.

Though 22% of U.S. consumers say they are self-conscious about redeeming coupons, 57% of this ‘self-conscious’ group say they no longer care since it saves them money, according to an ICOM Information & Communications survey of 3,013 household respondents, commissioned by retail analytics firm Precima.

Of shoppers age 35 and younger, 26% express reduced inhibitions about coupon use over the past six months. Same with nearly 23% who have suffered a direct financial loss, the research shows. Some 43% of shoppers overall say they’ve used more coupons in the past six months.

Savings strategies in a down economy, with job losses mounting and consumer confidence low, will continue to gain priority—as spending less on household essentials becomes the nation’s new status symbol, observes SupermarketGuru.com.