Canadian research sees store brands stronger for longer

Posted by Daniel Palmer on 10th August 2009

As the recession gradually weakens, purchasing trends in grocery stores are not what you might expect, according to new market research from The NPD Group.

Shoppers driven to store brands out of financial necessity now claim a longer term loyalty to these products. In fact, when asked what they purchased in the last 12 months and what they intend to buy in the next 12 months, store brands represent 50 per cent or more of food items for two of three households in both cases, demonstrating that criteria other than price is influencing purchase decisions.

According to Control Label Perceptions, Usage Patterns & Intentions, 55 per cent of consumers state that store brand products are just as good as name brand products and 9 out of 10 further claim that store brand products are meeting or exceeding their expectations.

“Our research shows that nearly every Canadian household is consuming store brand goods in some form or another within an average week,” Joel Gregoire, food & beverage industry analyst at The NPD Group, advised. “As the perceived quality gap narrows, name brands will increasingly need to invest in game-changers by raising the bar on innovation in order to stand out from the crowd.”

With respect to specific food items, nearly half of all consumers intend to purchase equal amounts of store brand and name brand products. This number drops to one-third for beverages, a category still favourable for names brands with 58 per cent of consumers reporting brand loyalty.

“While store brands are gaining in popularity, name brands continue to be strong in the beverage category. They also play a key role in breakfast and in-home snacking occasions,” Mr Gregoire said.

The research solidifies results from other studies from developed markets which suggest that the inroads made by private label won’t be quickly eroded by economic recovery. Growth rates have fallen, however, and are expected to continue slowing from the peaks reached late last year and earlier this year.

Price, value and previous experience with a product are the top three reasons consumers purchase store brand goods. Nearly half of those polled indicated they buy food and beverage items that offer the lowest price and best value, regardless of the brand. Accordingly, only one in 10 shoppers claimed to be strictly loyal to name brand products.

There is still a way to go before store brands can command similar loyalty to national brands, the research implies however, with nearly two-thirds of primary shoppers indicating the decision to purchase store brand products is typically made while in the store. This further indicates that price remains the major draw but highlights there is some loyalty for store brands amongst the growing consumer base.

Individuals aged 65+ and households with couples aged 50+ represented the most loyal store brand consumers.