Common wisdom these days says that price is the motivating factor for many consumer purchases. Who can blame shoppers for selecting private label products which can cost up to 60% less than branded products. In response, retailers are busily introducing store brands with low prices in order to lure shoppers. But the fast action of retailers to increase sales could also be squeezing profitability.
The details in Nielsen’s Shopper Trends show that marketers should consider factors other than price when building shopper loyalty. The report emphasizes that the key to shopper loyalty is linked to:
- Store accessibility
- Store format and selection
- Pricing and value for money
- Availability of quality products
- Efficiency and loyalty programs
Nielsen analysts have specific recommendations for retailers. Be sure to promote private label brands which complement branded products and can increase sales overall. The analysts also encourage manufacturers to work with retailers to develop marketing campaigns that improve the partnership of private label with branded products. For example, a private label tomato sauce and a branded pasta positioned together in a weekly flyer could influence consumers to purchase both products. Marketers such as grocers who are fighting for market share would do well to remind shoppers of the ease of visiting their store and of the availability of a wide selection of products.
These types of promotions could increase sales while also improving profitability for retailers, especially those who operate in the margin-thin grocery sector.[Source: The Lowest Price is not Always the Best Price, Nielsen, January 10, 2010]