Interest in private label is about more than value

Mintel shows that price plays a role, but consumers are increasingly drawn to the category's product quality and innovation.

Private label shoppers are even more keen on shopping the category thanks to COVID.

That’s according to the latest insights from the latest Mintel report, which reveal that shoppers of private label brands are four times more likely to claim they are buying “more” store brand products since the start of the pandemic in March 2020 (20% now, compared to 5% then).

Mintel points out that while the Bank of Canada forecasts strong growth in the back half of this year and in 2022, the impact of the pandemic will continue to be felt by many based on what is likely to be a ‘K-shaped’ recovery, a state when different parts of the economy recover at different rates, times, or magnitudes. Also, it warns of heightened food inflation, estimated to be between 3% and 5% in 2021.

This means private label’s strong value-centric positioning will continue to play well with shoppers.

But it’s not just value that’s driving interest in the category. Mintel says private label brands have evolved from just being a low-price alternative to name brands, and that the appeal of store brands “extends beyond value to offering unique flavours, ingredients and products as well.”

According the Mintel report, private label brands such as Sobeys’ Compliments or Loblaw’s portfolio of President’s Choice brands have become more dynamic, and offer an opportunity for retailers to advance their SKU assortment to meet ever-developing market trends and to more nimbly refresh the look of packaging and evolve product lines.

The numbers reveal an overwhelmingly high perception of these products’ quality and variety: 92% of respondents agree that “the quality and variety of store brands have improved over time”.

This perception is particularly true for younger shoppers and highlights store brands’ importance as a platform for innovation in appealing to the country’s emerging consumer base.

Feedback from shoppers indicates that from the consumers’ perspective, store brands are an effective tool in this regard: 68% agree that they’re “more likely to shop at one grocery banner over another if it carries a specific store brand” with the 18-44 year old set over-indexing on this view (74% vs 64% of over-45s)

Also, while value remains central to store brands’ appeal, few shoppers agree that “store brands are just a rip off of national brands” (29% agree, versus 71% who disagree).

Undergirding purchases, is the issue of trust: 80% of store brand purchasers agree that they “trust claims made by well-known store brands.” According to Mintel, in a time when trust and safety matter more than ever, consumer sentiment indicates that store brands represent one way for retailers to affirm their standing with consumers on this front.