New categories of commodities are driving impressive growth in private brand purchases during the COVID-19 crisis. Shoppers aren’t stopping at traditional entry points like milk, bread and eggs, but are adding vitamins, flour and breakfast mixes to their carts. Are retailers prepared to make this new dynamic last?
Forced trial led 38 million new grocery and OTC shoppers to buy private brands in the seven weeks since March 1st. Instead of shifting back to brand names as store shelves restocked, 29% have already returned to buy private brands again, Catalina’s Buyer Intelligence Database shows.
What once looked like lockdown-induced, short-term spikes are evolving into an extended buying pattern. Private brand dollar share surged from 12.9% to 14.7% during stockpiling in mid-March and is now settling at a new plateau of 14.0%. New shoppers to private brands are spending an average of $12.99 per trip on these products for the seven-week period beginning March 1.
To discover the specific catalyst of this trend that was prompted by homebound living, we zeroed in on products in three categories: vitamins, baking and breakfast. Each offers insight for retailers looking to boost their private brands’ basket size.
Getting and staying healthy
People are hypervigilant about their health now and are looking for simple, proactive ways to embrace wellness. Essential vitamins, minerals and supplements are one way that shoppers are looking to boost their immune systems due to the COVID threat. Data shows shoppers are finding such products are a low-risk entry point to private brand. Labels, pill counts, and potency are easy to compare across brands. While the entire category has seen hefty sales increases (up to 189%) versus last year, private brand lift is 26% higher than name brand lift during stockpiling for the three weeks ending March 28.
Over-the-counter categories are an opportune area to earn trust with new private brand shoppers. Private brands can use simple “compare and save” messaging to educate shoppers about the product quality at a low price. Building trust in this category may create a halo effect on shoppers more willing to try higher risk categories such as baby and pet.
Baking has become a panacea for these times. It’s a low-cost way to fill time, channel creativity and feed the family economically.
Baking includes a lot of commodity products such as flour, sugar and flavor extracts that typically have little to no distinction in ingredient quality or composition from name brands. Because they are primarily recipe ingredients instead of the main attraction, they are another low-risk category that’s enticing new private brand buyers. During the two major stock-up weeks ending March 21, sale of flour increased 142%, with an average lift 35% higher for private brands than name brands.
New shoppers in your baking aisle create an opportunity to educate shoppers about the breadth of brand categories across the store.
The new breakfast table
Until recently, breakfast was gravitating toward grab-and-go items, but now consumers are cooking this meal at home before multi-tasking between Zoom calls and home-schooling kicks in. For retailers, breakfast may be the most likely mealtime to win with private brands. It’s already full of low-risk products like milk, bread and eggs that have long been staple private brand categories.
Pancake and waffle mixes are commodity-plus products that are enjoying a renaissance. Previously stagnant, sales of these mixes have shot up, with private brands posting an average lift 84% higher than name brands during stockpiling the three weeks ending March 28 with a peak of 287% lift during the week ending March 21.
Think of the pancake as a center-of-the-plate item that may bring along other complementary opportunities to encourage promotion of private brands as a meal solution. By adding juice, syrup, meat products, and even coffee, you can bring together a quality meal solution for the private brand-curious in a value-driven way.
There is now enough weekly data for retailers to see how these new commodity-driven buyers behave differently than the average pre-COVID-19 private brand shopper. Capitalize on this free trial period that’s normally part of a costly conversion. Moving forward:
- Understand the buyer profiles of your brands and categories to identify scaled segments.
- Engage shoppers in a relationship with a reward or value to purchase again ahead of the next buying cycle.
- Look for ways to effectively manage future inventory to keep these new buyers interested.
- Start to prepare campaigns that will hold their loyalty when name brands unleash their trade dollars later this year.
Wes Bean oversees Catalina’s global retail network and is an expert on private brand strategies. He brings vision, strategic insight, and an analytical focus to the buyer intelligence company’s offerings and partnerships. Was has held several leadership positions at Walmart and led Southeastern Grocers’ private brand business. He also has extensive global experience, working in more than 20 international markets.