Store brands are no longer just a cheap, subpar alternative; the quality gap is shrinking. They have been stealing market share from national brands due to opportunities stemming from the pandemic, inflation, and a shift in consumers’ habits. From May 2023 to May 2024, store brands have outperformed national brands in year over year change in unit sales across 20 categories according to The Wall Street Journal. In the same time period over the previous year, store brands secured 17 of those categories.
In fact, store brands claimed 22 cents on every dollar spent in grocery stores – the largest share ever for store brands. This is a jump from just under 21 cents on every dollar from last year – the previous all-time high. So, why is this happening?
5 THINGS STORE BRANDS ARE DOING RIGHT
Store brands are taking advantage of their opportunities, scooping up customers that have been lost by national brands. Here are a few ways:
1. Providing premium products – Products are being marketed as desirable and competitive to national brands’ products; no longer viewed as a cheap, compromising replacement but as a potentially premium option.
2. Quality and convenience attracting customers – Retailers witness firsthand how shoppers respond to in-store merchandising, signage, and store displays. So, stores are emphasizing improvements in quality and convenience, which are top of mind for consumers.
3. Utilizing collaborations and partnerships – Retailers are collaborating and partnering with designers, celebrities, athletes, existing brands, social media influencers, and popular TV series to fuel consumer interest as well as tap into the larger audience of the collaborator/partner.
4. Effective and efficient marketing and operation systems – Retailers are on the frontline with access to valuable insights on evolving consumer needs, trends, habits, and buying patterns. Loyalty data allows retailers to be smart with their marketing efforts.
5. Communication of brand values – Sustainability and wellness, among other values, are hugely important to many consumers. Store brands have allowed retailers to communicate their values to shoppers through packaging revamps, product reformulations, and the introduction of new products.
5 THINGS NATIONAL BRANDS ARE DOING WRONG
Over the past couple of years, national brands have dropped the ball in some categories. There are some issues that may need to be addressed or clarified:
1. Unclear value proposition and transparency – Customers are questioning national brands on their value proposition and transparency in search of some answers on price, trust, and communication.
2. Higher costs – Without recipe improvements, innovation, or some other visible added value, increasing costs for existing brands and products feel unreasonable.
3. Deterioration of quality gap – The once seemingly large quality gap between national brands and store brands has appeared to shrink to consumers in many categories.
4. Lack of innovation – The drop in innovation eliminates the excitement of novelty for consumers, giving way for other brands and products to fascinate consumers.
5. Consumer trust fading – Have been seemingly sneaky and opaque with certain issues such as shrinkflation, diminishing consumers’ appetite for national brands.
QUENCH’S CONCEPT
Consumer trust for national brands is weakening. Many consumers want transparency with issues involving higher prices, quality, and sustainability, but aren’t being given any answers.
Provide answers.
Communicate brand values and illustrate how they align with consumer values, especially any sustainability or wellness measures. Consumers want to know what brands resonate with them.
Lean into partnerships and collaborations with influencers. However, choosing an influencer is not easy; it is surely quality over quantity, so choose wisely.
Regain control of thought leadership. You want your messaging to stick with consumers, rather than seem insincere or forced.
Bring the excitement back with novelty and innovation. Consumers are always eager to try new things; grab their attention with something fascinating.
Be the brand you would choose.
