Halos v. Heroes

Eavesdropping is not a mortal sin, but it's nothing to be proud of either. So let me apologize, in advance, for eavesdropping on a personal conversation between two industry conference attendees a few weeks back. Attendee #1 was worried about the growth of private labels (PL). Attendee #2 said that once this recession was over, the growth of store brands would not only slow but that national brand/private label relations would quickly return to their previous equilibrium.I successfully resisted the urge to lean over and interject, "WTF?" but was flabbergasted nonetheless. After six months of PL growth data from Nielsen and IRI, blogs on how retail "halos" may permanently eclipse even "hero" brands, and newspaper reports touting chain successes, I just assumed that everyone pretty much agreed that the private label genie was not only getting bigger, but that he wasn't ever going back into his bottle.I know: Never assume. So as a reality check, I reviewed some literature. Recent U.S. market history favors the PL bulls. According to data supplied by the Private Label Manufacturing Association (PLMA), in the 1980-82 recession, PL rose to 15% of unit sales, but fell back to 12% during the recovery. But from 1990-91, PL share went from 17% to 20%, and stayed at that level. In the recession of 2001, PL's share grew from 20% to 21% and stayed. Today, in the midst of another recession, we're seeing various share estimates (depending on how you slice and dice units, dollars, departments, etc.) that get you into the mid-20s percentage-wise.From a growth perspective, assume that in recent years, PLs have been up roughly 10% annually. In fact, most people are not pondering the possibilities of an eventual PL rollback, but its opposite: How long it will take the U.S. to emulate European models, especially England and where PL share hovers around the 50% mark.Sure, you can find a lot of variation out there. Trader Joe's sets the bar high at 80% private label, compared to Supervalu, for example, which is working toward 18%. I'd monitor Kroger, which is around 26% private label, as a realistic point of reference. But don't ever make the mistake of just studying your own backyard, especially if you live around New York City where, according to IRI, private label has only a 14% share. If you want a peek into the near future, do some store checks in Wichita, Kan., which sets the PL high-water-mark nationally at 34.3%.

Halos v. Heroes

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