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DAYMON WORLDWIDE FORUM

CHICAGO - Retailers should move away from conventional price gaps between national brands and private label, and price private label based on the quality of their offerings, a new report suggested."Price, Proliferation and the Consumer" concluded that store and stockkeeping unit variability is significant, and as a result, there is no "right" price gap. The report was released by Daymon Worldwide,

CHICAGO - Retailers should move away from conventional price gaps between national brands and private label, and price private label based on the quality of their offerings, a new report suggested.

"Price, Proliferation and the Consumer" concluded that store and stockkeeping unit variability is significant, and as a result, there is no "right" price gap. The report was released by Daymon Worldwide, a Stamford, Conn.-based private-label sales and marketing firm; ACNielsen; and DemandTec, San Carlos, Calif., a provider of consumer-centric merchandising software.

"If you have a unique private-label item, don't be afraid to price it higher," said Todd Hale, senior vice president of consumer and shopper insights at ACNielsen.

The report was officially released May 5 at the Daymon Worldwide Forum, a first-time event held here in conjunction with the Food Marketing Institute show.

The research included consumer segmentation of more than 50,000 ACNielsen Homescan panelists, along with SKU proliferation and pricing case studies in about 200 stores across multiple retailers. Daymon declined to release the names or number of retailers involved.

According to the findings, nearly three-quarters (73%) of consumers think national brands aren't worth the extra price, while 36% said they are willing to pay the same or more for private-label items they really like.

The research also showed that national-brand SKU duplication steals from private-label and overall category profitability. Case studies showed that after 7%-10% of SKUs were removed in multiple categories, category gross profits increased by 2.1%-6.4% over prior performance. At the same time, unit volume grew by 0.5%-3.5% and sales climbed by 0.5%-3.2%.

"Consumers want choice, but not too much choice," said Kevin Sterneckert, senior director of information systems for Daymon. "It's important to remove redundant SKUs."

The consumer portion of the research confirmed that private label is gaining share of consumers' wallet and mind, Hale said. At a time when retailers are not only competing with many nontraditional channels, a strong private-label program can provide a competitive edge.

Retailers interviewed at the forum said the findings validate their private-label efforts.

"It reinforces that corporate brands can be a key driver in competing in this market," said Andrea Wagner, corporate brands manager for Kroger Co. "Private label is no longer seen as cheap product on the shelf."

About 700 retailers, private-label suppliers and Daymon representatives attended the forum.

Private-Label Power

New private-label research released at the Daymon Worldwide Forum found:

Up to 85% of heavy private-label buyers say store brands are a good alternative to national brands, and 59% of consumers say they are "just as good."

One-third of consumers say some private-label items have a higher quality than national brands.

Private label is well developed among families with incomes above $70,000.

Nine in 10 consumers say they feel comfortable serving private-label products to guests.

Heavier private-label buyers make more supermarket trips than the average shopper.

Consumers who spend the most at retail have the weakest commitment to private label,

suggesting the need to promote premium private label and increase trial of store-brand products through sampling, advertising and displays.