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Private Label Sales Soar

NEW YORK—Private-label brand sales closed out a decade of strong growth, posting sales increases across all three major retail channels in 2010, according to the latest market data published in the Private Label Manufacturers Association’s (PLMA) Private Label Yearbook.

Over the past decade, annual sales of private-label products increased 40% in U.S. supermarkets. In total outlets—comprised of U.S. supermarkets, drug stores and mass merchandisers, including Wal-Mart—store-brand sales increased by almost 2%, while dollar share advanced by almost half a point to a new record level. Overall, sales were $88.5 billion, according to The Nielsen Co., which provided the private-label sales and market share trends data.

Store-brands share of dollar sales advanced to a record 19.1% in supermarkets, and unit market share was 23.5%. For Total outlets, store-brands dollar share rose to 17.4% and unit share came in at 21.8%.

An estimated $15 billion to $20 billion in additional private-label sales in channels that are not reporting to the Nielsen databases, such as warehouse clubs, limited assortment stores, convenience stores and dollar stores would likely have produced a grand total exceeding $100 billion for 2010.

The data also offer evidence of extreme efforts by national brand marketers in 2010 to recapture some of the market share they lost to store brands over the previous years. In particular, elevated promotional spending and short-term price cuts by national brands may have hedged the erosion of unit sales at the cost of any and all growth when it came to dollar sales. Supermarkets national brands were negative in year-to-year dollar sales, while their unit sales were up 1%.

In supermarkets, store brands sales increased by $1.2 billion and accounted for 100% of the growth in the channel, even offsetting a sales drop of -$149 million by national brands. Looking at total outlets, private label was up $1.5 billion, while national brands were down $4.6 billion, a spread of fully $6.1 billion in sales revenue.

When it came to units sold, national brands in supermarkets gained 1% while, store brands were essentially flat, indicating national brands likely relied heavily on price reductions and other inducements to shoppers to move their goods at any cost. In total outlets, store brands gave up -0.9% in units and national brands lost 0.6%. Whether such moves by national brands can be sustainable practices in terms of their bottom lines will be a development to watch during 2011.

A third of those polled reported they are buying more store brands now compared to a year ago and more than half describe themselves as frequent store-brand shoppers. Half also said they are more aware of store brands today than they were a year ago; and fully eight out of 10 believe store-brand products they buy are either equal to or better than national brands.

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