Consumer Trends Continue Toward Private Labels

DALLAS -- Despite a rebounding economy, national consumers still chose private labels in the first half of 2010. The shift to the less expensive products spanned all product categories.

An August survey conducted by Epsilon Targeting found that consumers are continuing to purchase store brand products, noticeably in the hard-to-crack personal care and baby care segments. According to Epsilon, 61 percent of consumers surveyed said they switched to private label personal care products, such as shampoo and facial moisturizers. In addition, almost 18 percent said they switched to private label baby goods, such as diapers, baby shampoo and child pain relievers. Traditionally, these categories have a higher perceived cost of switching because consumers feel they are giving up quality for savings, Epsilon explained. These numbers mark an increase over Epsilon Targeting's May 2009 survey when 51 percent of consumers said they purchased private label personal care products and 13 percent said they bought baby care products.

The research does indicate, however, that consumers may not be giving up national brands all together. At least 45 percent of those surveyed said they would definitely purchase their usual label of personal care, food or household products again if they had a coupon. More than 44 percent would buy their usual brand of health products, added Epsilon.

National brands should take notice of the results, according to Warren Storey, vice president of Epsilon Targeting. "This is an opportunity for national brands to turn to their vast resources and find new ways to engage their customers one-to-one," he said. "National brands have the ability to leverage rich data in new ways, across all communication channels from direct mail to mobile. The information is there-where their shoppers buy, when, and how they respond to promotions. As the economy returns, national brands must leverage this intelligence and apply it to pricing, product placement and special offers. Marketers must leverage this data to identify and provide incentives, such as coupons and samples, to consumers who would switch back."

In other categories the survey found that 75 percent of respondents switched to store branded household products, 74 percent switched to private label food products and 27 percent switched to private label pet products.