Higher retail prices are driving up the value of private-label in the US – not higher volume sales, a Nielsen study has claimed.
The report, presented today (5 June) at Nielsen’s Consumer 360 Conference, found that private-label sales of consumer packaged goods grew 9% last year to US$50bn in supermarket sales.
However, Nielsen’s research found that, while dollar sales of private-label products were up, unit sales were down 1.2%.
“When private-label dollar share started to spike, it appeared that shoppers were shifting to store brands in order to save money. That’s always been the conventional wisdom during economic downturns,” said Tom Pirovano, director of industry insights at Nielsen.
“Digging beyond the numbers, however, it’s clear that private label unit share is essentially flat. Higher prices in commodity categories like eggs, milk and cheese are driving private label dollars, not consumers deserting traditional brands.”
According to the study, the share of private-label products in grocery sales was higher in the parts of the US that had fewer major retailers.
In San Antonio, private-label goods accounted for 25.6% of grocery sales, Nielsen said. In comparison, store-brand goods represented just 11.2% of sales in New York.
“Market consolidation appears to be an important indicator for private label share,” Pirovano said. “San Antonio and other top markets for private label are dominated by just a few major retailers. New York and other markets with lower private-label share, however, have several smaller grocery chains with less opportunity to establish shopper loyalty for retailers or their brands.”