Private Label Shopping Trends in Personal & Household Care

When Datamonitor surveyed consumers across 15 countries about to what extent they agreed they had been ""making an effort to save more money,"" there was an overwhelming degree of agreement across geographies. In times of economic uncertainly, consumers become even more interested in obtaining value-for-money in their everyday shopping and private label is an important way of achieving this

Report Highlights
The adoption of a 'recessionary mindset' is already changing consumer attitudes and behaviors with regards to overall spending and their actual product choices. Any worries that consumers have about the economy only serve to strengthen private label spend because store brands are seen as an important way of achieving value for money

In the US, the overall market for private label was worth $70.4bn in 2007. Of this amount, private label personal care contributed $7.3bn in 2007 and is expected to account for $11.3bn in 2012. The market is far less developed in Asia where consumers are more brand conscious and skeptical of own label brands

Marketing fatigue potentially enhances the appeal and relevance of private label brands, especially as advertising is a key defense tactic for famous brands. Across the 15 countries surveyed by Datamonitor in August 2008, 47% of respondents 'strongly agreed' with the statement, ""there is too much advertising today.""
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Overview 1
Catalyst 1
Summary 1
Table of Contents 2
Table of figures 3
Table of tables 4
THE FUTURE DECODED 5
INTRODUCTION: Private label is entering an important era as value conscious shoppers look to maximize their discretionary spending 5
With global private label sales approaching one trillion dollars, growth can be attributed to both 'consumer pull' and 'manufacturer push' 6
TREND: Growth in private label penetration and sales is apparent across the globe 13
The propensity to opt for private label is increasing across all FMCG categories and most geographies 13
Private label is accounting for an increasing amount of spend in personal care categories 15
Household care private label brands are generally exhibiting elevated growth, but at a slower rate than personal care equivalents 19
Key takeouts and implications: the presence of private labels is increasing and is becoming a significant threat to producers' brands and manufacturers' profitability 23
INSIGHT: Price-led value has a significant influence on consumers' personal and household care choices 24
The search for value is increasingly governing where consumers purchase personal and household care products 24
Price/ value is a key influencer of personal care choices and this bodes well for additional private label growth going forward 25
The importance of price in shaping product choice is even higher for household care products 30
Key takeouts and implications: private label appeals to the growing number of consumers who are looking for ways to stretch their budgets and will further challenge brand loyalties 33
INSIGHT: Increasing economic uncertainty enhances the appeal of private label 34
Private label offers consumers discernable price savings 34
Achieving cost savings is the key driver to any switching behavior towards private label alternatives because consumers recognize the value they offer 35
Historical downturns, especially in the 1970s, have been major catalysts for private label adoption and development 37
As consumers adopt a 'recessionary mindset' in 2008, the search for price-led value in personal and household care purchases will intensify 38
More consumers have made cosmetic and toiletries purchases on the basis of value in 2008 40
More consumers have made household care purchases on the basis of value in 2008 44
The current economic downturn has contributed to consumers switching to discount stores and private label alternatives more often in 2008 46
Key takeouts and implications: private label appeals to the growing number of global consumers who are finding ways to stretch their budgets 48
INSIGHT: Private label choice is expanding and more sophisticated than ever 49
Private labels are increasingly 'tiered' to accommodate all levels of consumers' budgets and the core consumer trends driving shopper behavior 49
Premium and indulgence trends are signifying a new direction for private label adoption and innovation 53
The desire for 'everyday value' has sparked the expansion of private labels 54
Health and wellness trends have become a huge influence on consumer lifestyles 55
Organic and ethical private label ranges are growing alongside innovative product formulations and ingredients 57
Private label saturation could lead to time poor consumers returning to famous brands 58
Key takeouts and implications: private label has grown because it is increasingly 'on-trend' and industry players have been adept at aligning it with relevant consumer segments 60
INSIGHT: Consumers trust in private labels is growing which boosts propensity to trial and longer term adoption 61
The majority of consumers, especially in western consumer markets, consider private labels to be of good quality and believe that the differences between own label and famous brands are minimal 63
The quality that national brands offer is highly recognized by consumers in some categories 65
In-store environment also influences private label and national brand perceptions 67
Marketing fatigue also enhances the appeal and relevance of private label brands 67
Private label still typically attracts more lower income shoppers but the consumer base is broadening 70
Key takeouts and implications: private label is not a new phenomena but consumer acceptance is growing 75
ACTION POINTS 77
ACTION: Determine whether you want to manufacture private label brands or not 77
ACTION: Ensure that private label offerings are 'on-trend', deliver added value benefits for more discerning shoppers and receive additional backing during the economic downturn 79
Use the recessionary climate as an opportunity to grow private label share 79
Create and maintain a competitive advantage by reassessing strategic aims for future growth 81
Keep your private label brands fresh with new variants 85
Communicate that the quality differential between private label and famous brands is minimal 85
Be sensitive to the international differences in attitudes towards private label products 85
Ensure that you are focused on building effective relationships with private label partners 86
Retailers must ensure that the relative mix of value and premium private label lines is consistent with store positioning 86
ACTION: Manufacturer brands must maintain marketing investment to minimize deflection to private label alternatives 87
Re-assess whether you need to rationalize your brands and convince retail partners they are in line with their broader positioning 89
Focus on quality to maintain differentiation: prove to consumers that quality really matters 89
Develop more custom/personalized solutions for consumers to offer unique, targeted benefits 91
Develop communications that convince consumers that the additional cost of national branded household and personal care products is worth paying extra for 94
Consider developing a 'flanker' value sub-brand while ensuring that you offer something for all pricing tiers 97
Consider if brand related stores can help enhance brand prestige and loyalty 98
APPENDIX 99
Definitions 99
Methodology 99
Further reading and references 100
Ask the analyst 103
Datamonitor consulting 103
Disclaimer 103
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Table 1: Total private label penetration and spend (US$ millions) in Europe, Asia Pacific and the US, by country, 2002-2012 15
Table 2: Total private label personal care penetration and spend (US$ millions) in Europe and the US, by country, 2002-2012 17
Table 3: Total private label personal care penetration and spend (US$ millions) in Asia Pacific, by country, 2002-2012 18
Table 4: Total private label household care penetration and spend (US$ millions) in Europe and the US, by country, 2002-2012 21
Table 5: Total private label household care penetration and spend (US$ millions) in Asia Pacific, by country, 2002-2012 22
Table 6: Consumer survey: the importance attached to ""being seen with the right brand"" in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 26
Table 7: Consumer survey: the influence of price, habit/ preferred brand and brand image on health and beauty product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 29
Table 8: Consumer survey: the influence of price on health and beauty product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 29
Table 9: Consumer survey: the influence of brand image on health and beauty product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 30
Table 10: Consumer survey: the influence of price, habit/ preferred brand and brand image on household cleaning and laundry product choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 32
Table 11: Consumer survey: the influence of price on household cleaning and laundry products choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 32
Table 12: Consumer survey: the influence of brand image on household cleaning and laundry products choices in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 33
Table 13: Consumer survey: the extent that consumers are making an effort to save more money in light of the economic downturn in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 38
Table 14: Consumer survey: the extent to which consumers chose more cosmetics and toiletries on the basis of value and cost in the previous six months in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 41
Table 15: Consumer survey: the extent to which respondents chose more higher quality cosmetics and toiletries over the previous six months in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 43
Table 16: Consumer survey: the extent to which respondents chose more household cleaning products on the basis of value and cost over the past six months 45
Table 17: Consumer survey: the importance that individuals attach to ""feeling physically attractive"" to create a feeling of wellbeing or wellness in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 56
Table 18: Consumer survey: the importance that consumers attach to ""maintaining a clean and hygienic living environment"" in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 57
Table 19: Consumer survey: agreement with the notion that ""having a clean home creates a sense of wellbeing"" in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 57
Table 20: Consumer survey: agreement with the statement ""there is too much choice when doing grocery shopping"" in 15 countries across Europe, Asia Pacific, South America and the US, by country 59
Table 21: Agreement with the statement ""there is too much choice when doing grocery shopping"" in 15 countries across Europe, Asia Pacific, South America and the US, by country 68
Table 22: Consumer survey: the influence of price on health & beauty and household cleaning & laundry choices in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, 2008 72
Table 23: Consumer survey: the influence of brand image on health & beauty and household cleaning & laundry choices in 15 countries across Europe, Asia Pacific, South America and the US, by country and gender, 2008 73
Table 24: Consumer survey: concern about whether the promise of health and beauty products lives up to the claimed benefits in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 95
Table 25: Consumer survey: agreement with the statement, ""I am houseproud"", in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 96
Table 26: Consumer survey: the importance that consumers attach to ""maintaining a clean and hygienic living environment"" in 15 countries across Europe, Asia Pacific, South America and the US, by country, 2008 96
Figure 1: The private label market is impacted by a broad range of drivers and inhibitors, a message for retailer and manufacturer brands alike 7
Figure 2: Tesco, Marks and Spencer and Sainsbury's are leading forces in private label household care lines in the UK 20
Figure 3: Good value for money has become the most important influence over grocery store choice globally 25
Figure 4: Price, habit, ease and sensory attributes are the key factors shaping health and beauty product choices across the globe 28
Figure 5: Two thirds of consumers across 15 countries believe that price has a high or very high amount of influence on household care purchases 31
Figure 6: Perceived and experienced value benefits leads to private label trial and long term adoption 35
Figure 7: Shoppers have come to recognize the 'value for money' that own label brands offer 36
Figure 8: Consumers are increasingly making efforts to save more money due to the economic downturn 39
Figure 9: Half of lower income shoppers are having difficulty buying the groceries they need 40
Figure 10: Consumers are increasingly choosing cosmetics and toiletries on the basis of value or cost 42
Figure 11: Consumers are increasingly choosing higher quality cosmetics and toiletries 44
Figure 12: Consumers are increasingly choosing household cleaning and or laundry products on the basis of value or cost 46
Figure 13: European brand Sephora and Asia Pacific's Sasa expand outside home territories as a haven for indulgence, showcasing private label alongside famous brand equivalents 50
Figure 14: Cole's 'house brands as heroes' offering basic everyday value through to premium quality 51
Figure 15: The nature of the private label offering has changed considerably 52
Figure 16: Private label brands are experiencing growth with four distinct benefits/attributes 53
Figure 17: Boots segmented approach favors private label personal care over household products 54
Figure 18: Aldi touts exceptional quality and value across its private label personal care portfolio 55
Figure 19: Woolworths Australia is making inroads with its 'Home Brand' proposition in personal and household care 55
Figure 20: Ecover inspired: Tesco, Sainsbury's and Marks & Spencer cater to UK consumers' growing interest in natural (and highly effective) household products 58
Figure 21: Globally, consumers are familiar with private label and this better enables them to make a brand versus private label decision 61
Figure 22: Perceptions of private label are changing across the majority of FMCG categories 62
Figure 23: Private label brands are no longer perceived as merely low cost alternatives to famous brands 64
Figure 24: Global consumer attitudes towards private label are typically favorable 65
Figure 25: For some categories, private label categories are not deemed as adequate alternatives 66
Figure 26: Japanese consumers show the least amount of advertising fatigue but more than 40% of consumers overall believe there is ""too much advertising today"" 69
Figure 27: Consumers think that a significant chunk of the higher price associated with famous brands does not bring them tangible benefits 69
Figure 28: More US consumers currently report buying private label products 71
Figure 29: Young Adults and Mid-lifers place the most importance on brand image when choosing personal and household care products 74
Figure 30: Consumers across all age ranges place a high amount of importance on price when making personal and household care selections 75
Figure 31: National brand players are faced with a dilemma over whether to produce private brands or not 78
Figure 32: Industry players must determine the strategic approach taken to manage private label development 82
Figure 33: Private label players adopt different approaches to depending on whether the strategy is geared towards differentiation or low pricing 82
Figure 34: Generally, it is no longer enough just to offer price-led value to attract consumers 84
Figure 35: Sainsbury's Champneys Spa collection mimics Clarins with ""me too"" products allowing consumers to trade down from famous brands and trade up to imitation premium private labels 84
Figure 36: Fostering effective supplier relationships is crucial to the longer term growth prospects of private label branding 86
Figure 37: Enhance the full scope of the consumer experience by strengthening overall retailer positioning 87
Figure 38: Manufacturers looking to capitalize of premiumization in personal care must excel more than their competitors in the provision of factors associated with the Premium Price Index (PPI) 91
Figure 39: Four key personal benefits as well as the additional ease of customizing have driven the trend toward more personalized consumer packaged goods 92
Figure 40: Offering consumers additional possibilities by which they can co-create and self-customize will be more commonplace and will come to be an expected product feature by shoppers themselves 93
Figure 41: Charmin Basic - an example of a famous brand adopting the tiered pricing strategy of many private labels - and the possible private label response 98
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