2009: Year Of The Private Label

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IRI Times and Trends reports an explosion of brand equity for private labels:

Private label unit share has grown 1.2 points to 22.8 percent and dollar share has grown 0.7 points to 17.6 percent across all outlets in the past 12 months.

Safeway’s O Organics and Supervalu’s Wild Harvest now approach established brand name packaged goods in value. Interbrand’s Best Global Brands 2009 report cites Wal-Mart, Tesco, Carrefour and Target as private label brand leaders, but also notes a great deal of missed opportunity:

Many retailers are still following the tired and expected formula of emulating national brands, rather than learning from the successful European model of developing a new vernacular and creating destination brands in their own right.[more]

This untapped potential is reflected in IRI’s numbers which show that, despite the overall picture of private label success, sales are “concentrated in the hands of a relatively small number of consumers.” The top 50 private label categories make up 17 percent of all consumer packaged goods categories, but account for 69 percent of store brand sales. This means that highly successful brands, such as Target’s Archer Farms and Stop & Shop’s Simply Enjoy, are responsible for the bulk of this private label success.

And what does this mean for old school brand name leaders? The Interbrand report points out that brands like Oreo and Ritz, attempting to compete with private labels, are adapting their packaging to “fit the format of a specific retailer’s needs.” These changes dilute the brand, and put it at risk of looking like a “dumbed down” version of its true self.

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