CPG marketers must maintain a clear vision of how their most promising consumers and shoppers are defining affordability at each moment of purchase, according to the latest IRI Times & Trends report titled, “Private Label and National Brands: Dialing In on Core Shoppers.”
National CPG brands are doing a great job at providing value, the report says, but there are many areas they can focus on to increase customer engagement.
“One strategy for building penetration is to fracture concentration,” the report says.
Today, the top 50 CPG categories account for 64% of overall CPG dollar sales. The private label sector is slightly more concentrated, with the 50 largest categories capturing 67% of total private label sales. CPG marketers can fracture concentration and reap sizeable revenue rewards with outside-the-box product launches that allow them to compete in new categories. Procter & Gamble, for example, gained 30 share points in the sleep remedies category, worth more than $120 million, during the first year ZzzQuil was on the shelf.
What’s more, private label manufacturers also are exploring new aisles and categories. For example, TreeHouse Foods is zeroing in on opportunities around snacking and healthy eating with the acquisition of Flagstone Foods, a top manufacturer of private label healthy snacks, such as trail mixes and dried fruits.
But it’s important to note that consumers turn to different channels for different CPG purchases. And, the choices they make can be unexpected, particularly given the speed with which channel blurring is taking place.
“Given the complexity of managing private label offerings across multiple categories, retailers must be adept at understanding what key categories will resonate with their target shoppers,” the report says.
National brand innovation has been strong in beauty, a key drug department, as manufacturers work to deliver products that make beauty more affordable to all. National brands also captured sizeable share in vitamins, with new forms and targeted formulations receiving heavy new product development focus and strong consumer support.
Private label is strong in the mass/super channel, with innovation and growing assortment supporting momentum. These efforts are creating momentum across departments, with private label frozen departments reporting increases of 5.3 unit share points, refrigerated reporting increases of 1.8 unit share points and general food reporting increases of 1.2 unit share points. Target, for example, has been adding assortment to its upscale beauty selection and is looking to solidify its status as a one-stop shop, providing more selection of dry, dairy, and frozen foods.