Own label’s popularity will outlive the cost of living crisis

During the cost of living crisis, UK consumers have adopted a range of strategies to manage their spending. Strategies include shopping around – increasingly at the discounters – deciding not to buy certain items altogether and focusing on essentials.

Some of these habits are not permanent, particularly as inflation rates ebb and flow and circumstances change. However, one trend we have noticed consistently across global shoppers – particularly among Brits – is the popularity of private-label items.

In our latest research, 54% of consumers said they believed own-label lines were good value for money, 40% said the products were higher or of equal quality than brands, and 52% of consumers thought they were a good alternative to brands.

It’s clear that quality perceptions of private-label products have improved over the years. Together with the recent need to economise, private labels have become an increasingly viable option on shelf.

This is reflected in the sales data. Private label’s share of UK unit sales has grown 1.2% in 2023 compared to last year, and branded unit sales have declined by 5.4%.

The same picture is emerging globally. Value sales of private-label items grew 12.2% in Q1 2023. If they carry on at their current trajectory, they could account for 25% of all grocery sales within the next decade.

A clear strategic position

This seismic shift in growth and demand for private-label products presents both challenges and opportunities for retailers.

Recognising the staying power of private labels and understanding it is not a fleeting trend is incredibly important. Its trajectory will play an increasingly vital role in grocery dynamics, and the key to maximising this opportunity lies in having a clear and strategic position within the category, product, and industry partnerships.

To maintain success in this new era, private labels need to continue to differentiate themselves and innovate. There’s an increasing need to move beyond the perception of being merely the “cheaper alternative” and offer distinct value and quality that will continue to resonate with consumers.

A collaborative relationship between retailers and manufacturers will also prove beneficial. By aligning strategies with private labels in mind, both parties can reap benefits – retailers may benefit from early insights into assortment and category changes, while manufacturers can secure their positions in this evolving landscape.

Private label has emerged as an unexpected hero in the cost of living crisis, helping consumers maintain their taste for value. But they do not have to simply be a response to tough economic times. Their enduring appeal, growing consumer acceptance, and global success stories underscore their importance in the future of the grocery industry.