By Arwen Kimmell, Contributing Editor
The emergence of private label as a quality product that competes with well-known name brands has changed the dynamics of how consumer products are marketed and sold.
The world of private label, however, is at somewhat of a crossroads. What began some 35 years ago in the form of “no-name” generic products has now blossomed into a $100 billion business. And private label’s growth shows no signs of slowing. Many believe the economic recession has been a boon to sales of private-label products. Consumers have modified their buying habits and have turned to private labels as a means to stretch their dollars.
The Hartman Group’s new “Private Label 2010: Redefining Meaning of Brand” report finds that 47% of consumers have switched from a favorite name-brand product to a private label because of the economy. However, this single data point doesn’t accurately tell the story of the private-label phenomenon. The private-label landscape is too complicated to be adequately explained by aggregate sales volume or customer transaction sales data alone. There is another side to the private-label story that frequently goes unmentioned.
Today’s retailers have become increasingly sophisticated with their private-label offerings, to the point that many consumers simply consider them on par—if not better than—many iconic national brands. Because private-label brands have more flexibility in the innovation department—the freedom to develop endlessly without worry of offending long-time loyalists—they have seized the opportunity to jump ahead in critical areas such as ingredients, flavors, preparations and even packaging.
Arwen Kimmell is senior ethnographic analyst for The Hartman Group, Inc, Bellevue, WA. For more information about the “Private Label 2010” report, visit hartman-group.com.