Hartman Group: Private Label Items Gain Ground On Name Brands

Private label products are “nipping at the heels” of name brands according to a new report from consumer market research firm the Hartman Group examining the key drivers behind consumers’ purchasing decisions. The report notes that although demand for private label brands typically increases during periods of economic downturn, current growth is also being driven by generational differences in why consumers make a purchase and how they interpret the meaning of a brand.

How Has The Concept of Brand Evolved?

Name brands began to gain popularity as access to information increased throughout the mid-1970s and, in the case of the food industry, these products have primarily been associated with quality and consistency which then led to the development of private labels as a less expensive alternative. According to the report, the way a brand is perceived by the consumer can vary significantly by generation, with a range of criteria, ranging from packaging imagery to ingredients, impacting how consumers currently interpret what a company represents.

“Brand clearly is still meaningful and it’s morphing and evolving in the minds of consumers and in many cases that is because the brand is now not the only heuristic to tell consumers about the brand — they are doing their own due diligence,” CEO of The Hartman Group Laurie Demeritt noted during a webinar presentation about the report. “They are getting to know the brand by looking at the attributes, the look and feel and the product itself.”

Dermitt also emphasized that companies need to be cognizant of how impressions can vary. In the case of consumers aged 18 to 24 years old, criteria such as aesthetics and design are key determinants of how that consumer group perceives brands; however, for baby boomers, elements such as ingredients, taste and quality play a more significant role in brand perception.

“Sampling is still very important to all consumers which has obviously been very fraught in the landscape of COVID-19, but it’s something they really valued in the past and they desire and hope to do it again in the future… specifically the baby boomer generation,” Dermitt stated.

How Does This Impact Brands?

According to the report, today’s consumers are less aware of which brands are actually private label offerings than in the past and 22% of shoppers stated they don’t know if their retailer offers one. Historically private label products were traditionally viewed as lower price alternatives that offer a good value while name brands are associated with high quality and good taste. But within the better-for-you, premium or organic space, the gap in preference between name and private brands continues to dwindle and stigma surrounding product quality becomes less of a factor.

“With younger consumers, who currently have some different purchase criteria… there’s much more willingness to think about private brands in the same role that name brands have played in the past,” Dermitt said. She also noted, in some cases, consumers are even willing to pay a higher price for private label brands defying the traditional industry trends.

In addition to generational differences, purchasing decisions and innovation are often driven by emerging health trends and diets. Among Gen Z consumers, almost 70% of the survey respondents said they had tried a diet or some form of a customized eating approach in the past year, with 67% noting that product attributes related to health and nutrition are important.

What does this mean?

Looking forward at the post-pandemic food landscape, name brands and retailers will need to consider not only building a brand identity relative to its target consumer, but also one that aligns with the changing nature of how we shop. Consumers still rank price value and quality as key criteria, but an increasing number are shopping for groceries online, opening new modes of discovery that will impact how impressions are made.

“In a world where online shopping has now become very normalized to consumers and in fact, a quarter of grocery dollars are now spent online, that will be something important for us to think about,” Dermitt highlighted. “Will discovery be different in the future? When we can’t do sampling, what does that mean? All brands need to think about this new environment.”

Consumers are also increasingly adventurous, the report found. As a result, new flavors, ingredients and product types are equally important to promotions and value pricing when trying a new product.

“Consumers are really begging for new flavors, new formats, new types of food,” Dermitt said. “They are ready to explore the food environment in a way they haven’t been able to over the past year and a half.”