Consumers Become Loyal to Money-Saving Generic Brands
CREDIT: Generic cereal image via Shutterstock
Americans who switched to buying generic brands during the recession are sticking with it even if their financial circumstances have improved.
In a new survey from Accenture, nearly 40 percent of grocery shoppers said they increased their purchases of generic and store brands in recent years because of tough times.
And now that they've become more familiar with them, more than three quarters of those surveyed said they won't cut back on the generic brands they buy, even if their disposable income were to return to the level from before the economic downturn.
Price is the key factor in consumers' new preference for generic brands. Two-thirds of the 500 U.S. consumers in the survey said they buy store brands because those products are cheaper, and 87 percent said they would buy more brand-name products if those products were offered at the same price as the comparable store brands.
In addition, more than half of shoppers said it would take a permanent price reduction of the brand-name product – to the level of the the generic brand – to persuade them to switch back.
An increased variety of generic and store brands also contributed to their popularity. Almost half of shoppers believed stores now offer a greater number and variety of store-brand products, and more than a third saw them as simply other brands on the shelf.
The research also found that half of consumers buy store-brand products because they perceive the quality to be just as good as the brand-name equivalent, while just 9 percent felt the quality or taste of generic brands was inferior to the brand-name product.
"Undoubtedly, uncertain economic times are a major factor in the growth of private label, but it is the increased sophistication of stores' own brands that has helped them retain customers," said Bob Berkey, from Accenture’s Consumer Goods & Services practice.
The study concluded that the growing perception of trust, quality and preference for private-label products should be of most concern to consumer-goods companies that are competing with stores for the same shelf space.
Berkey advised consumer-goods companies to create a clearly defined private-label strategy that understands the unique attributes that drive preference and loyalty in their consumer, engages with them across multiple channels and creates an excellent customer experience.
"Market position and profitability are at stake," Berkey said. "Extreme competition between retailers and consumer-goods companies can result in inefficiencies and waste for manufacturers and retailers, and [in] undifferentiated products for the consumer."