The Effect Of Private Labels On Customer Trust

The private label food business is booming. Data shows that 27% of all US consumers buy private label snacks most or all of the time, and 53% purchase private label snacks at least sometimes.  Private labels have come a long way from the 1970’s and 1980’s when shoppers felt that store and “generic” brands were not the same quality as national brands. What, exactly has changed and how can you capitalize on the renewed consumer trust in private labels?

The Growth Of Private Label Foods

Private label brands can carry the store name, like at Trader Joe’s or they carry an independent brand name like Archer Farms at Target, Great Value at Wal Mart and 365 at Whole Foods.  There is little research that has shown whether the store name or a private brand name are better for business. Consumer attitudes about store brands seem to be the same across the board.

Private label sales grew by 2.5% in 2014 versus 1.1% for brand names. According to Wells Fargo, the private label brand Simple Truth grew by $1.2 billion and is projected to double that growth over the next several years.  All you have to do is conduct some basic market research yourself to see how private labels are dominating. The next time you do your own food shopping, look at the shelves. Whether you’re at Aldi, Costco, Wal Mart or your regional grocery chain, you’ll find the shelves lined with private label brands.

The main driver in the growth of private labels is trust. There was a time, only a few decades ago, when store brands were viewed as lower-quality than national brands. But things are changing. The Hartman Group conducted a Cultural Perspective report and found that most consumers see no difference between private label and national brands in terms of quality. In fact, many consumers cannot distinguish between private label and national brands.

Consumers Now Trust Private Label Quality

Furthermore, private labels are typically less expensive than national brands. The Great Recession changed the way American consumer shop. Affordability was the number one driver for decision making in the late 2000’s. Though the economy has recovered, wages remain stagnant and shoppers are now looking for the highest quality at the best price, which often lands squarely in the private label market.

When a customer tries a private label brand and likes what they get, they are more likely to purchase that item again than to return to the national brand. More than 50% of shoppers buy more store brands today than they did in the last two years and also describe themselves as repeat store brand shoppers.

Customers are willing to try private label products as long as they appear to be a better value for the quality. The key to building trust and repeat business is to ensure that your private label foods exceed their expectations.  If you are looking to develop private label snack foods for your retail business, partner with a true market leader.

Are you looking to partner with a leader in wholesale healthy snacks?

Mister Snacks is a national leader in the private-label snacking business for over 30 years, Mister Snacks works closely with clients to help them develop the product line that will resonate with their customers. Contact Mister Snacks today to get started building your private label snack foods.