In our July 25th e-newsletter, we talked about how the lingering effects of the Great Recession have opened a new era in U.S. society we call Societal Reset (The Post-recession Post-Multicultural Era: A Societal Reset), as consumers adjust their behaviors to meet more realistic economic expectations. One marker in many food categories is the growing appeal of Private Label brands (i.e., store brands) across several demographic segments.
In order to understand the magnitude, SSG looked at the Compound Annual Growth Rate (CAGR) of Private Label buyers pre- and post-recession. According to our analysis of GfK-MRI research, while the Total Market buyer base of Private Label food offerings grew only 1.7% between Spring 2006 and Fall 2012, Millennial buyer base growth was an impressive 21%. We also saw that that Hispanics lag a bit behind Millennial and non-Hispanics in private label purchase incidence, but they are quickly catching up, landing at 56% post-recession from 43% pre-recession.
This means that Millennials and Hispanics are sub-segments to be reckoned with when it comes to Private Label growth—and hence critically important for branded players as well. Getting to know these audiences better is topic for another e-newsletter, but we’d like to highlight two points:
- When it comes to Millennials, they are looking for products that help make life exciting without breaking the bank.*
- With regards to Hispanics, Bilingual and English-dominant Hispanic households are more likely to purchase a private label product.**
What are the strategic implications for retailers? Category management in Private Label is vital. Ensure that your PL offering meets the needs of the fastest growing segments: Millennials and Hispanics. Both of these segments are beginning to see value-added Private Label (i.e., Organics) as a quality alternative to branded products. They are also looking for convenient home-cooking, so providing easy meal recipes of trendy dishes and promoting value-added products for these price-conscious consumers will be key to capture their following.
What are the strategic implications for marketers? Ensure that your branded product delivers a unique value proposition today. Name brands can no longer rest on their laurels of the past. Deliver variety through innovation, incursion into ethnic products, and the promotion of new uses for “old” ingredients (i.e., think about how pinto beans got a makeover into refried beans). Take convenience to new levels, not only thinking of convenient home-cooking but also on-the-go and out-of-home alternatives.
*Susan Viamari, editor of Times & Trends, SymphonyIRI, PLStoreBrands.com, July 12, 2012
**“The Hispanic Private Label Consumer”, Mintel, August 2012
SSG is a strategy consultancy driven by management P&L experience and predictive analytics. We develop fact-based business models, growth roadmaps, insights and segmentations for the Total Market and the evolving Hispanics, Multicultural & Millennial segments. We help clients focus their limited resources where the highest market opportunities exist, and which strategies advance maximum, efficient Total Market growth.