We’re living in an age when private label brands are experiencing tremendous success. So much success, in fact, that it can be hard to remember that in the not-so-distant past consumers made their purchasing decisions based almost entirely on loyalty to name brand products.
The perception of private label brands used to be quite negative. In North America, shoppers felt that private label brands were for people on tight budgets that couldn’t afford the best. Consumers were fiercely brand-loyal, and in most categories, popular name brands were king. Whether it was Huggies Diapers for the kids, Heinz ketchup for summer BBQ’s, or Sears appliances throughout the house, consumers bought products that were well known, established brands.
The economic recession in the early 2000s and the global meltdown in 2008 completely shifted the retail landscape. Driven by lower prices, consumers started consistently looking for the biggest bang for their buck. And for the first time in retail history, this trend was consistent across almost every single product category.
For example, one survey from late 2010 indicated that 93% of consumers had changed their grocery shopping habits because of the economic downturn, and many of them did so by trying out more generic brands (which are private label products), sampling everything from generic hand soap to generic frozen pizza.
Even though the economy has started to stabilize in the last few years, consumers grew accustomed to saving money by turning away from big name brands. It’s how they saved money throughout the recession, and the preference to buy low does not show any signs of slowing. Plus, private labelers have done a remarkable job of increasing in the quality of their products in the last ten years. Research shows that consumers truly feel that in terms of quality and value, these products are as equally good as the name brands they used to purchase.
What does this mean for online sellers?
It’s clear that the door that was first opened by economic necessity won’t be closing anytime soon. Private label brands are no longer viewed simply as low-cost alternatives to name brands; shoppers are genuinely excited about the high-quality products they can find that fulfill their needs across a variety of price points.
What’s more, fewer shoppers assume big name brand products equates to top quality. That same survey from 2010 showed that 57% of consumers agreed with the statement “Brand names are not better quality.” More recently, that figure inched up to 64%!
Private labeling, both for online shopping and for brick-and-mortar stores, has made its mark as a viable business model in the retail world. And because studies are showing that consumers have gotten used to saving money, your private label business has the potential to not only make it — but make it BIG.