Demand for Store Brands Declining Among Younger Demographics

NATIONAL REPORT — Seniors and retirees continue to buy store brands in droves, but the younger generations are bucking the trend, leading to a decline in sales.  

Following a strong 2020, consumer demand for store brands began to slow last year. Sales in the United States for consumer packaged goods reached $963 billion for the year ended Oct. 3, 2021. Private brands accounted for 17.3 percent of these sales, compared to 17.7 percent in the year-ago period, according to Mary Ellen Lynch, principal of IRI Center of Store Solutions Group, who shared these metrics during a recent webinar hosted by the Private Label Manufacturers Association (PLMA).

“This is a bit of a red flag. … Private store brands surged in 2020. Then, whenever consumers could find any product, they bought it. That changed,” she said. 

Nearly $1 out of every $5 spent by seniors and retirees continues to go to store brands. For the 52-week period ended Oct. 3, 2021, 18.9 percent of their total spending went to private brands — an increase of 0.2 percent over the prior year.

Conversely, Generation Z spent 16.2 percent of its overall dollars on store brand products over the same period, a decline of 1.3 percent year over year, while millennials spent 18.3 percent of their dollars on store brands, a 1 percent decline year over year.

Lynch cited four main reasons for the decline among younger shoppers:

• Increasing mobility;
• The impact of e-commerce as people order what they are familiar with online, as opposed to scrutinizing products more when shopping in-person;
• Product discounts bringing down the price of name brands; and
• New product innovation by name brands.

Supply chain issues also helped name brands as they “seized the moment” by encouraging consumers to return to purchasing legacy brands during this period, Lynch noted.

What's Selling Well 

Breaking down the performance of store brands, among categories where private brands account for more than $50 million in sales, nearly two-thirds of sales (65 percent) are in the edible food category, with the remainder in the nonedible category.

In the edible food category, dried meat snacks showed the biggest private-brand sales increase in 2021 compared to the prior year (up 28 percent), followed by cheesecake (up 21 percent) and liquid drink enhancers (up 20 percent), according to IRI data. 

Among categories where private brands account for less than $50 million in sales, other breakfast foods and shelf-stable products posted the largest private-brand sales increase in 2021, rising by a whopping 1,113 percent, followed by lard (up 278 percent).

During the webinar, Lynch pointed to Casey’s General Stores Inc. as a retailer focused on store brands. The convenience store chain has added 100 SKUs of snacks and beverages to its offering. “Casey’s understands the value consumer and their need to shift their budgets with the increase in gas prices,” the IRI executive stated.

Despite accounting for just a third of all store brand sales, some private brand nonedible products also enjoyed impressive year-over-year increases in 2021. Several were in the haircare category: hair conditioners (up 83 percent; the largest nonedible category increase), shampoo (up 42 percent) and hair accessories (up 26 percent). The baby gifts/toys and furniture category and external analgesic rubs were also top growers.

In terms of private brand general merchandise, pool and spa chemicals (up 143 percent in sales) and firelog/fire starter/firewood (up 25 percent) led this segment. 

Founded in 1979, the Private Label Manufacturers Association (PLMA) is a nonprofit organization established to promote private label products.