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Private brands: Important to Multicultural Consumers

As a result of the recession which affected the United States economy and impacted the spending of multicultural consumers, private brands * have played an important role in to reclaim space in the consumption or CPG industry for its acronym in English. Also known as own brands, private retail sales increased from 16.2% to 17.4% between 2009 and 2011, with an annual growth that has surpassed the marks name with a significant margin.

But since then, the United States economy has been in recovery and consumers are now selecting products more than look only at the price.

According to a recent Nielsen study on the global Outlook of the marked retailer, consumers today appreciate more the quality, availability and suitability of the product, as key factors driving their purchase decisions.

So while the growth of private brands was comparable, but slightly higher than the name brands in 2012, growth patterns were reversed in 2015 and 2016, resulting in a small decrease in the participation of private brands.
However, Nielsen research shows a significant interest from consumers in general in the labels currently private.

More than two-thirds of the total US households (70%) are in agreement that private brands are a good alternative to brand named products.

Nearly a decade after the recession, private-labeled products can be found in almost every household in the United States.

Then, what about behind the growth trend of the named brands and products the decrease in the participation of private brands? With the improvement in the economy is less households buying private label products? Other factors are in play?

Through information from Nielsen Homescan, it is clear that private brands are lower among multicultural segments, which are propelling the growth of the population in the United States. These groups–Hispanic, Asian and African – Americans spend more on brand name products named and relatively less in private brands.

In particular, while the rates of annual purchase of named brands are lower among Asian and African American households compared to non-Hispanic white households, they are especially children for private brands, where African American households spend 18% less per year and Asian American households spend 22% less.

Not only are the multicultural consumers less likely to buy the brands of distributor, also are more related to negative perceptions towards these products. These segments of the population tend more to question the quality of private brands and to consider that they are for people with low budgets.

These negative perceptions probably influence the multicultural consumer buying behavior and can contribute to the decline in the rate of purchase of private among these groups.

Due to the growing multicultural population in the United States, it is recommended that manufacturers and retailers deepen toward private labels marketing efforts to grow their participation again.

Without the critical of an efficient strategy inside and outside component shop, and digital marketing, multicultural buyers can spend long fully to private-label products, if you don’t get to them in a genuine way, and with lasting impact.

In an effort to capture these buyers beyond the efforts of marketing, retailers and manufacturers also could focus on the categories of private labels of higher sales in all segments of the population, such as: vegetables and fresh herbs, eggs, water, fresh meat, toilet paper, nuts, plastic disposable plates and coffee, among others; which have had a significant increase in absolute sales of brands private dollars in the past four years.

As many shops retailers with physical presence continue investing in private brands and some of the major online merchants competing for winning a greater participation of consumer spending, private brands are here to stay.

But as the United States population continues its way to diversity and multicultural pluralism, manufacturers and retailers should follow outstanding trend in order to resonate among multicultural consumers when they buy products that add value to their lives.

* Private or own brands can be defined as any product with the name of the company (white marks) or under a name registered by the enterprise (private labels) or business that sells the product.
Methodology
The information used in this article was derived from Nielsen Homescan, Total EU., for the 52 weeks ending April 2, 2016; Nielsen Strategic Planner (information 2009); Nielsen Answers, Total us – all store formats combined (All Outlets Combined – xAOC) for the 52 weeks ending April 2, 2016; and the survey from Nielsen Homescan of January-February 2016.

About Eva Gonzalez

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Executive Director of Diverse Consumer Insights & Multicultural Marketing at Nielsen North America. With over 20 years of experience in marketing, communications, and consumer insights, she transferred to the United States in 2011, where she carried out Consumer Insights for diverse groups and the promotion of initiatives on multicultural consumers.

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