Although 57% of consumers say their financial health is good, fears of a recession are driving slightly less consumer confidence in Q3 2019, according to the latest IRI Consumer Connect Survey results, produced by IRI, Chicago. Expecting to face a recession — or, perhaps more likely, a “semi-recession” — consumers are increasing their savings as a precaution for maintaining financial stability.
“While shoppers across generations and income groups in 2019 are undoubtedly more price conscious, they are turning to private label because of their positive perceptions of the value,” says Joan Driggs, vice president of content and thought leadership. “Shoppers are buying private brands because it makes them feel good to save money without sacrificing taste, selection or quality. The improved consumer perception of private label value is having a growing influence on store choice, with many leading retailers offering premium private label selections.”
The Consumer Connect Index, which monitors consumers’ financial health and consumer packaged goods (CPG) behaviors for factors such as brand loyalty, attitudes toward organic/natural food and beverages, perception of national compared to store brands and frequency of using retailers’ and manufacturers’ coupons decreased by almost three points in Q3 2019. However, consumers’ feelings about their household’s financial health in Q3 2019 is on par with sentiment in Q3 2018. Despite that fact, consumers are increasing their savings to maintain financial stability as a precaution in the event of an economic downturn. Consumers report they are saving more in 2019 (42%) compared to a year ago (38%), and 56% of households earning $100,000 or more say their savings have grown in the past six months. The rate of increased savings is fairly consistent across all generations, but is most common among Generation Zers.
Popularity of private label
Nearly 99.9% of shoppers are buying private brands today.
Younger, senior and lower- to middle-income consumers are key targets for private label growth. Millennials demonstrate the highest adoption of private label products, increasing 10% in 2019 from 2018, outpacing their adoption of national brands. Millennials are also moving into higher-spending years, thus demonstrating value, quality and innovation as key to continued adoption.
Across edible departments, private label unit sales growth slowed, but frozen and beverage outpaced total category and national brand sales in Q3 2019.
“Private label is experiencing growth that outpaces that of national brands and has increasing influence on store choice among consumers, especially among Gen Z,” says Driggs. “However, there remains room for improvement. Packaging image has been found to be a purchase barrier among Millennials and light buyers. In addition to packaging, retailers should continue to find ways to innovate. Don’t wait for national brands to lead with trends, such as plant-based, functional and wellness products.”