IRI: OTCs Favored in HBC Store Brands

JEFF WELLS

CHICAGO — Consumers hold a high level of confidence in over-the-counter private-label offerings, according to a recent study by Information Resources Inc., Chicago. However, they also have very low confidence in personal care store-brand products, IRI reported.

This confidence discrepancy carries numerous implications for the entire private-label field, researchers said.

The report, “Understanding Emerging Trends and Key Success Factors in Private Label,” stated that consumers perceive vast differences in image and quality between private-label and name-brand personal care products. They perceive uniqueness in innovative name brands, and thus form a strong “emotional bond” with them.

In contrast, the study explained, consumers see a “functionality,” or sameness, across the OTC spectrum.

How much difference consumers perceive between name brands and private label depends on how much they expect from the category, according to Sean Seitzinger, vice president, retail solutions and strategic consulting, at IRI's Center for Retail Innovation. Manufacturers and retailers establish a value proposition for these products, which in turn influences what consumers want.

The clarity of the value proposition explains successes and misfires throughout private label, Seitzinger said.

“[National brand] categories like skin care, hair care and cosmetics have done a great job at defining for their customers what value is, and how they deliver value uniquely inside of their product categories,” he said. “Whereas I don't think the same kind of sophistication from a manufacturing and marketing perspective has happened with the cold, flu, first aid and vitamins categories.”

The study polled 700 private-label consumers, who were categorized as light, medium or heavy buyers in the sector. Eleven percent of heavy users said they were likely to buy private-label cosmetics, whereas 71% of these same users said they would use “cold/flu/allergy/pain reliever” products. Of the medium users, 70% said they would buy private-label first aid products, but only 31% said they would buy private-label hair care products.

On the whole, consumers hold positive opinions of private-label health and beauty care products. More than two-thirds of those polled agreed they are of “excellent quality.”

“Even light consumers of private-label products agreed that these products are of excellent quality,” said Brent Baarda, director at the IRI center.

The study touts this overall confidence as a ripe opportunity. Capitalizing on it, Seitzinger said, revolves around in-store marketing.

The first and most important step in rejuvenating lagging categories, such as personal care, is to let consumers know that the products can perform, Seitzinger said. This means using giveaways, in-store trials and sample offerings to get customers using the products.

“If I was a retailer and I only had one dollar to spend inside the supermarket, it would be getting those private-label solutions into consumer hands,” he said.

Beyond this, Seitzinger explained that supermarkets need to build awareness of their private-label offerings and highlight what makes them unique. Allocating more space to these products is one way to build their importance, he said. Increasing the effectiveness of placement so that it fits in with other needs and incorporates consumer research should also help.

In addition, supermarkets shouldn't be afraid of innovating their private-label products in line with the name brands, especially in categories where innovation is the name of the game.

“Being a fast follower shows that you understand the value proposition for consumers,” Seitzinger said. “I think it allows you to be more relevant and to build your brand with the consumers within your store.”

Baarda and Seitzinger emphasized that the time to focus on private label is now. According to them, more than half of customers are currently using private-label products in one capacity or another.

“Retailers have identified private label as one of their most promising strategies for driving sales growth, for improving margins and for building shopper loyalty,” Baarda said. “Grocery retailers are telling us they're very emboldened by private label's recent success.”