Own label products could see boom in sales as inflation looms, leading analyst IRI (Information Resources Inc) has said.
In one of its twice-yearly reports on demand signals for fast moving consumer goods (FMCGs), IRI has claimed that forthcoming price increases might mean own label goods increase sales.
But any own-label boost is yet to happen, added the data company, whose latest figures cover the year ending July 2021.
This might be because during the pandemic “consumers sought reassurance from buying recognised and and trusted brands”, IRI reasoned, despite retailers widening the price gap between established brands and own labels by offering discounts and promotions.
Ananda Roy, international senior vice president at IRI, said: “As the indexed price gap widened between national brands and private labels, you would have expected to see shoppers opting for the substitutes that offered better value.
“Surprisingly, this didn’t happen. Throughout the UK and major European markets analysed in the Demand Signals Study consumers chose trusted, nationally distributed brands.
“In response, several retailers offered significant promotions and discounts especially in the period covering Q4 of 2020 and Q1 of 2021 to no avail.
“In addition, private labels, who often rely on smaller contract manufacturers, were also unable to meet spikes in demand due to lower inventory levels and their own supply-side disruptions.”
But Roy said things could now change.
“As inflationary measures hit the UK and parts of Europe and national brands raise their prices, retailers must decide exactly where they will allow price increases to flow directly through to consumers.
“Undoubtedly, we will see price hikes for many staple national brands.
“In categories where major supermarkets and discounters wish to see greater private label penetration, they may decide to hold back and offer more affordable prices.”