Private label products have seen a major increase in popularity during and after the COVID-19 pandemic.
Matt Reese, EVP of Nashville, Tennessee-based food brokerage the Reese Group Inc., sees the lingering effects in stores and customer purchasing habits. Manufacturers began having issues producing products, grocers had trouble keeping name-brand items on shelves and customers began trying private brands.
“A lot of people were hesitant about private label in the past and bought them and liked them,” Reese said. “And they realize it’s just as good a quality as the name brands.”
Brand loyalty is something Reese said retailers have had to contend with for years. But that loyalty is waning in the face of inflation and supply chain shortages. It also has become less pronounced among younger consumers.
“Millenials and the younger generations are not as brand loyal,” Reese said. “People in the past would only go in and say they only buy Kraft mac and cheese. They will always buy that mac and cheese. Now, the younger crowd doesn’t really have those loyalties.
“Let’s say somebody only eats Green Giant green beans. But they can’t find Green Giant green beans. People are picking up the private label and again, realizing it’s of the same quality.”
Rising prices also have led more consumers to private label offerings.
“We’ve had a lot of price increases from other manufacturers. And it’s not been just one, it’s been four or five over the last year and a half,” Reese said. “People have changed the way they shop because of COVID.”
Reese noted that shoppers could develop brand loyalty for private label. “Now that people are kind of forced into trying the private labels, they’ll see those are just as good as the name brand.”
Reese added that successful retailers have taken the time to understand their customers who are shopping private labels and are responding accordingly. They are becoming more stringent on the quality of their products and are continuing to expand the variety.
The effects of inflation on private labels can also be seen in the pricing. Reese compared the price of a can of vegetables, saying that it has risen from about 65 cents to $1.25.
“We’ve had like six price increases on vegetable oil,” he said. “It’s gone up over about 120 percent…the price of cans has gone up. Steel cans have increased up to 50 cents. It’s crazy.
“People are still comparing those prices and seeing the benefit of private labels, but everything has gone up.”
In addition, shoppers are moving toward buying in bulk. Membership stores, which have always touted private labels, are benefiting from them greatly, according to Reese.
“They’ve been pushing it long before this shift happened,” he said. “I think that’s helped things along. People are buying in bulk. More people are going to Costco and Sam’s Club and are trying their private labels. It all goes back to people trying to save money, realizing that the private labels are just as good as the branded and sticking with it.”
For more information, visit reesegroupinc.com.
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