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Shoppers increasingly turning to private label brands, study finds
By our News Team | 2021
Stockpiling during last year’s initial lockdown boosted shopper uptake of private labels, a trend that seems to be continuing.
South Africa’s private label (PL) retail sector has continued its upward trajectory amidst lockdowns and an altered consumer reality.
Analysis by research company NielsenIQ shows that the sector now commands 24.3% of total basket value sales in the country, which equates to R71-billion (US$4,6-billion) in annual sales. The figures are for the 12 months ending May 2021.
According to NielsenIQ, lockdown stockpiling boosted growth during the early part of last year. In March 2020, just before SA’s first and highest Level Five lockdown, stockpiling sent private label growth soaring, and this strong double-digit growth was maintained throughout the second quarter of 2020.
Interestingly, during this same period, name brands saw a decline in sales.
These trends served to cement the PL growth path from 2019, when the sector’s share of sales was 22.8%. This share rose to 23% by May 2020 and 24.6% by May 2021.
Photo by Gustavo Fring from Pexels
Not the no-name brands of old
Why has PL succeeded against all the odds? NielsenIQ says a key realisation is that these types of products are no longer the no-name brands of old, which were often perceived as ‘cheap’ and of inferior quality.
“We have seen a diversification of PL products that range from entry-level offerings presenting high value for the price point, to the mid-range solid offerings, to a new generation of premium products that represent both quality and value. This stems from more investment in the sector, creating the depth and the momentum that we see today,” the research team observes.
In terms of more functional reasons for private label’s growth, particularly during the lockdowns, The State of Private Label in South Africa report found that supply continuity was a key factor.
This was driven by consumers’ need for quick ‘in and out’ shopping experiences, primarily due to health and safety concerns. This concern also led to a sharp decline in the number of shopping trips, which meant if products were out of stock, a shopper would only return to a store in a week or a month.
Purchase opportunities were therefore far more limited and product availability was vital. Big stock ups at each trip also saw an increase in the purchase of larger pack sizes, once again to reduce the number of store visits. Within this context, it was the manufacturers’ and retailers’ ability to meet this need, via an increase in the distribution and assortment of private label products, that ultimately led to the increase in value sales.
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