Survey: Private Label Brands are Good Alternatives

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Survey: Private Label Brands are Good Alternatives

SCHAUMBURG, Ill. – Private labels are no longer the lower-price, lower-quality substitute to name brand products in U.S. consumers’ minds, according to a new study by The Nielsen Co., parent company to Convenience Store News, which surveyed nearly 54,000 U.S. consumers online in June and July.

Store brands are viewed positively by the majority of U.S., as nearly three-quarters (72 percent) of consumers said in a recent survey that store brands are good alternatives to name brands, and 62 percent of consumers reported they consider store brands to be as good as name brands, which is a three point increase from 2005, the company stated.

Private label products now account for more than $81 billion in the U.S, up 10.2 percent over the past year, according to Nielsen Co. data of U.S. grocery, drug and mass merchandiser stores, including Wal-Mart, for the 52 weeks ending Sept. 27.

In addition, 63 percent of consumers believe private label brand quality is as good as name brands, while and one-third of consumers said they consider some store brands are higher quality than name brands.

"While private label products continue to follow the success of consumer packaged goods (CPG) manufacturers’ name brand introductions, more CPG retailers are making private label a priority with messages on quality as strong as messages on value," Todd Hale, senior vice president, Consumer & Shopper Insights for Nielsen Co., said in a statement.

However, not all consumers show love for private labels. Sixteen percent of survey respondents stated store brands are not suitable when quality matters, and the same percentage said store brands have "cheap-looking" packaging, according to the company.

The survey also revealed that price and value are vital factors. Nearly three-quarters (74 percent) of consumers said it is important to get the best price on a product, while two-thirds (67 percent) of consumers agreed store brands usually provide "extremely good value" for the money, and 35 percent of consumers are willing to pay the same or more for store brands if they like it. Conversely, under a quarter (24 percent) of consumers believed name brand products are worth the extra price, according to the company.

"In today’s economy, consumers are looking for ways to save money and for many of them, that means taking a new look at private label products," Hale said. "With more retailers offering satisfaction guarantees on private label purchases and even serving up blind taste testing and trial programs, consumers’ exposure to private label products has never been greater."

He continued: "Private label development varies greatly by department and we see strongest growth in products where private label has historically been strong. Translating private label growth outside of commodity categories requires innovation—an area where CPG manufacturers, rather than retailers, traditionally excel."