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Grocers are banking on private-label sales to boost traffic and loyalty
Ibotta study shows that 72% of shoppers are trading down to private-label brands, creating an opportunity for retailers
2 Min Read
Marketing tech firm Ibotta surveyed over 5,400 grocery shoppers and CPG brand marketers for its annual State of Spend report.Shutterstock
Grocers are using the recent surge in private-label sales to attract more customers and keep them for the long term, according to a new study.
Marketing tech firm Ibotta surveyed over 5,400 grocery shoppers and CPG brand marketers for its annual State of Spend report, and found 72% of consumers said a challenging economy motivated them to trade down to private-label brands. Promotions of private-label items can create long-term brand loyalty and value for shoppers, the report said.
Seventy-five percent of shoppers said they would try a different brand if it was offered at a lower price than what they usually buy, according to the study.
“If shoppers take an exit ramp to a private-label product, brands understand that the cost of inaction is steep,” Bryan Leach, founder and CEO of Ibotta, said in a press release. “As they think strategically about how to win consumers back, digital promotions have proven to be one of the most cost-effective and immediate solutions for growing market share.”
Other findings of Ibotta’s State of the Spend report include:
Shoppers are spending more on essentials and less on everything else. In the food and beverage arena, the biggest declines year over year are seen as discretionary: alcohol (down 8%), plant-based meat/dairy (down 5%), snacks (down 4%), and frozen foods (down 3%)
Shopping habits are now meeting budget and time constraints. Fewer people are shopping at least once a week (down to 77%) and rewards or loyalty programs are impacting where shoppers buy their groceries
Decision-making at the grocery store is usually influenced most by, price, quality, store sales, and familiarity, in order of importance. Seventy-four percent of grocery purchases are repeat buys
Investment in digital promotions is on the rise. Digital promotions lead spending growth across tactics, with a marked rise in use for early-stage engagement
Most marketers (70%) agree the biggest threat to their brand is private-label competition. This calls for a strategic focus on building brand equity, differentiating the offering, and expanding the customer base
Marketers’ top two priorities for measuring success are incremental sales and customer lifetime value, beating out other metrics like market share, payback period, and customer acquisition cost
Private label has been launched into orbit over the past year. Annual store brand dollar sales have increased by 34% over the past four years ending in 2023, according to the Private Label Manufacturers Association (PLMA). Compared to 2019, they were $60.2 billion greater in 2023. Store brand dollar share was ahead 1.2 points to a record 18.9%. During the four-year period, annual store brand unit sales were up 500 million and unit share improved 0.8 points to 20.7%, also a new high according to PLMA.
