A woman looking at some shelves in a supermarket trying to decide what to buy

The Growth of Private Label and the Need for Planogram Optimization

Due to high unemployment and increasing grocery prices caused by the global pandemic and supply shortages, 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 Nielsen, in the first quarter of 2020, private label brands saw an almost 15% year-over-year increase. 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 grow even after the pandemic is over.

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.

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