U.S. Consumers Continuing to Shift to Private Labels Despite Economic Recovery

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Despite the continuing economic recovery, U.S. consumers in the first half of 2010 continued to shift to less expensive private labels in all product categories, including the hard-to-penetrate personal care and baby care segments, according to a recent survey by Epsilon Targeting.

According to the survey, 61% of consumers said they switched to private-label personal care products, including shampoo and facial moisturizers, during the last six months while almost 18% of the respondents said they moved to private-label baby goods, including baby shampoo. These categories historically have a higher perceived cost of switching because consumers believed they are sacrificing on quality, according to Epsilon Targeting.

The gain by store brands in the personal care category is especially noteworthy because consumers tend to be more loyal to national brand shampoos, facial moisturizers and other "appearance" products, according to Epsilon Targeting. For instance, 37% of respondents said they moved to private-label shampoo and conditioner in the past six months, based on Epsilon Targeting's research. Traditionally, this is a small category for store brands — less than 3% of all shampoos and 1% of conditioners purchased at supermarkets in the third quarter were store brands, according to the Private Label Manufacturers Association, through The Nielsen Co. Among drug store shoppers, the figures were 5% and 4%, respectively.

Still, national brands linger in the minds of shoppers, as indicated by the research. At least 45% of respondents said they would definitely purchase their usual label of personal care, food or household products again if they had a coupon. More than 44% said they would buy their usual brand of health products.

"This is an opportunity for national brands to turn to their vast resources and find new ways to engage their customers one-to-one," stated Epsilon Targeting VP Warren Storey. "National brands have the ability to leverage rich data in new ways, across all communication channels from direct mail to mobile.  As the economy returns, national brands must leverage this intelligence and apply it to pricing, product placement and special offers. Marketers must leverage this data to identify and provide incentives, such as coupons and samples, to consumers who would switch back."

[Source:  "Consumers Shift to Private Label in the Double Digits, Including in Non-Traditional Personal and Baby Care Categories."  Epsilon Targeting.  16 Nov. 2010.  Web. 10 Dec. 2010.]