Who Buys Private-Label Products?

A new study by The Nielsen Company shows that the face of private label consumers is changing. As a result, food manufacturers and retailers will have to reconsider the foods they produce and how they are marketed.

Nielsen looked at the buying habits of more than 8,000 Canadian households across the country. What they found was that heavy private-label buyers are typically from larger households of three or more, with children under 18; are under 45 years of age; and have incomes of $70,000 or more.

These consumers account for almost 60 per cent of total private-label dollar sales, and typically spend more than the average shopper across all product categories and per shopping trip. On average, private-label products account for more than one-third of their total shopping trip bill.

However, the study also found that the face of the private-label buyer is evolving to one-person households of consumers age 55 to 64, with no children and incomes of $100,000 plus.

The evolving consumer

“As the face of the private-label consumer evolves along with general demographic trends to smaller, older, higher-income households, retailers need to make sure they are planning for the future by innovating to meet the needs of tomorrow’s private-label consumer,” says Carman Allison, director of Industry Insights for Nielsen. “This could mean an increased focus on smaller sizes or portion-controlled products, health and wellness offerings such as low fat or low sodium, and premium offerings to attract higher-income consumers.”

Other insights from the survey included the fact that Canadians are not switching to private label from national-brand products due to the downturn in the economy. “National brands are meeting consumers’ needs for value by driving more sales through feature pricing, while private label increased prices at a higher rate, narrowing the shelf price advantage,” says Allison.

“That said, Canadian retailer concentration is increasing, with the top five retailers representing the majority of the grocery trade. This translates to increased private label development.”

Private-label sales of fast-moving consumer goods are $11.4 billion, based on national sales for the past 52 weeks up to July 31, 2010. That compares to national brand sales of $50.9 billion. Canadians currently spend $844 on private-label products annually.