From product shortages, increased online shopping, and cost-conscious consumers, 2020 has fundamentally changed shopping habits. In the chaos of the pandemic, private label products have surged in popularity; as consumers scrambled to find items both in-store and online. Private label product sales often fluctuate based on economic conditions, growing in popularity as the economy suffers. Despite this, unprecedented factors such as the pandemic’s effect on consumer behavior, improvements in branding, and the rise of e-commerce may create more sustainable growth in the private label products market.
So, how much has the market for private label products grown in 2020? In an article by Packaging Strategies, private label brand sales have increased by 29% from the beginning of the pandemic, compared to the 24% sales growth of regular brands. Large retailers, including Walmart, Target, Amazon, and Kroger, have continued to expand their lines of private label products amidst demand by consumers, even before the beginning of the pandemic. A study by AlixPartners discovered that 65% of US consumers tried a new brand or private label in at least one consumer product category since the coronavirus outbreak. Of these consumers, 1 in 4 who tried new products plan to stick with them, as private label market growth shows no signs of slowing down.
Key Drivers of Growth
Affordability, the need for alternatives, and a rapid increase in online shopping remain primary factors in the growing consumer preference for private label products. According to a study conducted in September of 2020 by McKinsey, almost 20% of consumers are currently buying more private label products, with the primary reason being affordability. A rise in unemployment and growing concerns over finances have caused consumers to rethink brand loyalty, pushing them towards low-cost alternatives to traditional brands. In addition to cost, product availability has also influenced consumer behaviors. A survey by Shopkick found that 69% of consumers purchase different brands if their preferred brand is unavailable. With the pandemic resulting in panic buying, shortages in essential items further increased private-label item sales. Growing concerns over in-person shopping have resulted in the growth of e-commerce. According to Oracle Retail, 61% of consumers making grocery purchases online during the pandemic. This study also found that 45% of consumers discovered new brands online and will stick with these products moving forward.
The Future of Private Label
As consumer behaviors evolve, there is one thing we know for sure; private labels are not going anywhere. RetailWire states that 60% of consumers are likely to continue to purchase private label products. With this in mind, private label brands will need to remain agile when developing and promoting their products. In a survey by FMI, 83% of retailers expect to boost private-label strategies for e-commerce in the coming year. With this, consumers can expect to see private label brands increase their online presence, venture into different product categories, and harness new consumer trends.
Looking to stay above the competition in 2021? Eyes4Research has everything you need to collect high-quality qualitative and quantitative data for impactful decision making. Learn more about our capabilities or request a demo by visiting www.eyes4research.com.