Due to tariffs and inflation, the average consumer has less money to spend on groceries. They are looking for ways to make their dollars go further. What does this mean for manufacturers and retailers? Private label brands are taking up greater market share.
According to a report from Circana, in the U.S., private label brands have a 22% dollar share of CPG sales, a 4.6% growth from 2023. Over the next decade they are projected to capture 25% of grocery dollars. In Europe, private label is even more popular than in North America making up close to 30% of market share versus only 18% in North America.
Brands and retailers need to rethink assortment and shelf layout in an environment where private label is expected to see huge growth.
Manufacturers and retailers need to work together. Retailers need to strike the right balance between their own products and the national brands they stock and promote in order to maximize sales. Category managers need to learn how to recommend the right planogram arrangements without cannibalizing the retailer’s private brands.
As an example, a manufacturer may want to try a horizontal blocking shelf layout in a category, but a retailer may be worried the private label brand won’t get as much attention and the change might negatively impact overall sales in the category.
In the example above, virtual reality can be used to quickly and cost effectively test various concepts online to create an optimized planogram arrangement. One which ensures that private label still captures shopper attention and contributes to the manufacturers’ brand share.
Private label is only expected to grow in the future because of changing shopper behavior caused by economic uncertainty. Find out how to use virtual technology to position your brand for success at shelf. Contact us if you would like to learn more.
