In today's competitive retail landscape, gaining a deep understanding of consumer preferences between 'branded' and 'private-label' products can empower both suppliers and retail executives. This insight, especially in the face of recent economic pressures, can provide a strategic advantage and help navigate the evolving market.
Understanding Consumer Choices
Our analysis, based on robust survey data from Forrester's ConsumerVoices Market Research Online Community, involving 668 online adults from the US, UK, and Canada, reveals nuanced consumer buying behavior. This data provides a solid foundation for our insights. Approximately half of the respondents alternate equally between branded and private-label products. However, preferences shift towards branded options, particularly in personal care and electronics, due to a higher quality perception.
The Shift Towards Private-Label Products
Interestingly, economic factors are nudging consumers towards private-label products, which are generally cheaper. Nearly a quarter of those surveyed have increased their purchase of private-label items over the past year, and this trend is expected to continue. Rising prices and living costs primarily drive this shift, compelling consumers to seek better value for money. As one participant expressed, managing budgets is forcing them to "look for better-value products."
The Challenge for Brands
Despite the allure of lower costs, transitioning to private label is not without risks for brands. Our findings suggest that once consumers switch, they are less likely to revert to branded products unless the cost difference becomes minimal. This scenario underscores the importance of brands not just competing on price but also creating a 'value barrier'. This could be done by enhancing functional, experiential, or symbolic value to maintain consumer loyalty even when private labels offer a cheaper alternative.
Strategic Implications for Brands
To effectively counter the private-label trend, brands need to reassess their value proposition. It needs to be more than competing on price alone; brands must ensure they deliver value that justifies their price premium. This might mean innovating product features, enhancing user experience, or leveraging brand heritage. Brands like Procter & Gamble have successfully maintained their market position by focusing on these aspects, demonstrating that a strong value proposition can mitigate the risks of consumer churn. Your role as suppliers and retail executives is crucial in this adaptation process.
Conclusion
For suppliers and retail executives, the key takeaway is clear: understand your consumers' value perception and adjust your strategies to meet these expectations. Whether through reinforcing product quality or enhancing brand experience, maintaining consumer loyalty in the face of economic pressures and competitive private-label offerings is crucial.
About Us
Woodridge Retail Group is a sales and marketing agency that accelerates business growth and profits online and in stores. We meet clients where they are and commit to growing their businesses. That commitment is core to who we are.
From national retailers like Walmart, Target, CVS, and online giant Amazon to regional retailers like Texas’ H-E-B, Woodridge is with you every step of the way.