Private-label buyers older, richer: Nielsen

A new study finds that the traditional private label buyer is changing, as an older and wealthier demographic embraces price-point shopping.

Nielsen has released a study of private label products and found that the consumer profile is changing.

Although the heaviest buyers of private label brands, such as Loblaw’s President’s Choice or Sobey’s Compliments brands, have traditionally been families (with adults 45-plus and one or more children under 18), the study found that this is changing.

In the survey of approximately 8,000 Canadians, Nielsen discovered that increasingly, private-label buyers are one-person households, 55 to 64 years old, with incomes of $100,000-plus.

The evolution of the heavy buyer away from families to older, single people poses a challenge for brands, according to Carman Allison, director of industry insights, Nielsen. Allison says that to stay competitive, the private labels should begin to focus on smaller sizes and portion control, as well as products that offer low fat and low sodium options.

Some private label brands have already started moving in this direction, such as President’s Choice’s Blue Menu, targeted at health-conscious consumers.

Allison also suggests adding premium products to the private label lineups, to cater to the higher income consumers they’re increasingly attracting.

Despite the recession, national brands kept their share of sales by offering feature pricing while private label prices increased.

The price gap that makes private label products more attractive has shrunk, but they are still roughly 30% cheaper than the national brands.

Canadians spend $844 on private label products annually, but sales stayed flat over the year at $11.4 billion. National brand sales increased 3% to $50.9 billion.

For the study, Nielsen examined the buying behavior of more than 8,000 Canadian households, demographically and geographically representative of the total Canadian population, and grouped them based on annual dollar buying rate from private label products across the store. Private label and national brand figures are based on national (excluding Newfoundland) sales in grocery, mass merchandisers, drug, general merchandisers and warehouse clubs, 52 weeks to July 31, 2010.