retail news in context, analysis with attitude

Marketing Daily reports that a February poll of 800 supermarket shoppers sponsored by the Private Label Manufacturers Association (PLMA) indicates that 80 percent of them believed that there has been no improvement in the economy, 40 percent believe that the economy actually has gotten worse, and that - not surprisingly - this translates into greater private brand usage.

According to the story, “About 39% say the current economy is a ‘very important’ factor when they buy a store brand, and 62% say they intend to purchase more private-label products going forward. When asked if they had recently ditched a national brand purchase in favor of a generic purchase, 43% say yes.

“A year ago, only 35% said they had done so. Some 57% describe themselves as frequent purchasers of private-label goods, up from 55% a year ago -- a percentage that is consistent across gender, income and age. Awareness of the extent of private-label options, however, is highest among younger shoppers, with 72% of those in the 18-24 group saying they are more aware of private-label products than they were a year ago, compared with 55% of those age 65-plus.”

The numbers suggest that current private brand penetration - estimated to be about 24 percent in units and 18 percent in dollars - is likely to increase because of continuing consumer concern about the economy.
KC's View:
I would never argue with the premise that the recession has created a consumer culture in which people have persistent concerns, in which they may be more careful about expenditures and more diligent about saving. Which probably is a good thing.

However, I would question some of the assertions of this survey.

First, I’d like to know a lot more about those 800 people - who they are, where they are from, how they are employed, and how their lives have been affected by the recession. Their attitudes almost certainly will be colored by events.

I’m skeptical about the survey’s conclusions because it says that more than 600 of them think that there has been no improvement in the economy. We can argue about how permanent the improvements have been, or whether improvements mask some sort of deeper problem (like deficits) that have not been addressed. All legitimate arguments. But to say there has been no improvement since the time 18 months ago when it looked like the US economy was going to off a cliff? That stretches credibility in my view. (You do that survey at a Tea Party convention, you are going to get one set of answers. Do it in Cambridge, Massachusetts, or in Berkeley, California, and you are going to get a vastly different view. Neither would be accurate or reflective of objective reality.)

Finally, I would suggest that people and companies in the private label business should be careful about pegging their long-term success to a slugging national economy. Private brands have to represent more than just a cheaper alternative. That’s been the long-term message that companies like Wegmans and Trader Joe’s and Stew Leonard’s and Costco - to name just a few - have communicated about their private brands.

But mostly, I’m just not buying the resolute pessimism.