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AlixPartners survey: Private label purchasing here to stay

Nearly 45 percent of consumers surveyed told AlixPartners the shaky economy has motivated them to continue to consider and ultimately purchase more private label and other lower-priced food items.

A survey released June 13 by AlixPartners concurs with the GfK/Roper findings.

Nearly 45 percent of consumers surveyed told AlixPartners the shaky economy has motivated them to continue to consider and ultimately purchase more private label and other lower-priced food items.

“The American consumer is staunchly committed to value and is more open to private label and other less expensive food products than ever before,” said David Garfield, managing director and head of AlixPartners’ consumer products practice. “Consumers’ uncertainty about the U.S. economy and their personal economic situations, coupled with food- and commodity-price volatility, creates an environment of both challenges and opportunities for food-makers across the board.

“The food industry is seeing a heated battle for market share and our survey shows it will continue as more consumers are up for grabs,” adds Garfield.

Survey results even show that consumers’ consideration of private label items is significant across all major food product categories—dairy, frozen foods, fresh produce, flour- and produce-based shelf stables and refrigerated meat.

“These findings say a lot about today’s consumer, and should be of interest to both branded-food companies and private label producers,” said Garfield. “Companies that rely heavily on brand loyalty need to understand the post-recession consumer and adapt their business accordingly. Those that do can even be big winners, while those that don’t will likely suffer consequences.”

According to those surveyed several important factors still influence their choices. Price and quality are the most important considerations for shoppers considering private label items, with more than 60 percent of those polled indicating that price is the most important factor, while more than 40 percent still have nagging concerns about the quality. But, private label producers seem up to the challenge, as the survey shows once shoppers try private label they tend to end up making a permanent switch.

Also, product availability has a major impact on purchase decisions. Consumers indicated that they would purchase another brand if their branded preference was out-of-stock—more than 57 percent said they would purchase either a similarly-priced, less-expensive or private-label product, including nearly 40 percent saying they would buy the private-label item. When faced with an out-of-stock situation, only 3 percent of shoppers said they would go elsewhere to find the product, suggesting that an out-of-stock product more often than not means a lost sale for branded products companies.

Overall, the AlixPartners survey indicates that for the foreseeable future, and possibly permanently, food companies will face an unforgiving, value-driven consumer.

“Shoppers now are looking for the best products at a price that makes sense for their families. With this in mind and costs such as fuel prices pressuring household budgets, the increase in private-label buying is likely to be a trend that stays in place for some time,” said Garfield.

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