Private label brands’ sales increase lower than expected given economic situation

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In a report released this week, market research firm IRI, which recently merged with NPD Group to expand its product offerings, detailed how buying behaviors have changed during the recent pandemic/inflation economic upheavals as regards their engagement with private label brands (which the report refers to as ‘store brands.’)

 Looking back at how those behaviors changed during previous bouts of economic uncertainty is only of limited use this time around, said Mary Ellen Lynch, principal of IRI’s Center Store Solutions.

“During this time consumers started to exhibit a lot of changing behaviors,”​  Lynch said during a webinar presentation yesterday of the study’s findings.  A complicating factor is the increasingly large number of options shoppers have, she said.  It means the old formula of when prices go up, private label sales do, too, is no longer as sure a bet as it once was.

Consumer sentiment at low point

Lynch noted that consumer sentiment as a strikingly low point, which ought to have augured for a private label windfall.  A measure called the Michigan Consumer Sentiment Index, a national survey of households conducted regularly by the University of Michigan, stood at 56.8 in late November as fell as low as 50 in June.  For reference, the index stood at 101.0 just before the pandemic.

“That’s the lowest point this sentiment measure has been in more than 50 years,” ​Lynch said.

As inflation started to take hold, Lynch said consumers responded at first by simply buying less.  Then they started to switch brands.

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