Private Label Sales Soar for IGA Retailers

What happens when you combine the panic buying of pantry staples with a financially-strapped customer base? If the last few months are any indication, you get the perfect storm for a private label revolution.

“We believe huge numbers of shoppers bought private label simply because it was in stock when there were shortages, or because a sudden job loss caused financial insecurity in the household" says IGA CEO John Ross. "But they’ve since discovered it’s a great product. That creates a huge opportunity for not just increased sales during the pandemic, but long term conversion of shoppers and sustained sales after the pandemic ends." 

While store brands were already performing well in 2019—with dollar sales climbing by just over four percent and unit sales by over two percent across all U.S. retailers—those sales skyrocketed as the pandemic heightened. When many states’ stay-at-home orders started this March, retailer private brand sales rose between 70-80 percent, according to Catalina Insights data presented in a recent My Private Brand webinar. The same data shows that 42 million new shoppers bought retailers’ private brands in March and April, and at least 31 percent of new private label shoppers are purchasing the same label in subsequent visits.

$4.9 Billion Year over Year Gain in Private Label Sales (15%)

70-80% Rise in Private Label Sales in March 2020

42 Million New Shoppers to Private Labels in March and April 2020

In total, 2020’s first quarter saw a 15 percent year-over-year gain of $4.9 billion in private label sales, a figure that matches the sales spike seen by IGA retailers across the U.S., says IGA Exclusive Brand Director Robin Groscurth of the just over 15 percent increase in IGA Exclusive Brand cases ordered as of March 31. Moreover, Groscurth expects the trend to continue through the summer and into the fall.

"Shoppers started favoring private brands during the 2008 recession as they became more financially concerned, and that same preference for private label value is happening now during COVID-19," Groscurth says. "But unlike in 2008 when shoppers would spend time searching for the best deal, they're now often choosing their local grocer over the big box store in the next town over because they see us providing a safer and faster shopping experience. The impact of the virus is going to continue well into next year, which means shoppers will need the value-priced, high-quality products in our IGA Exclusive Brand line more than ever."

So how do you use this surge in private label popularity as an opportunity to encourage more people to give IGA Exclusive Brand products a try? Consider these ideas: 

1. Promote Availability

With big box stores consistently out of stock on national brand pantry staples, IGA retailers can advertise their in-stock availability of IGA Exclusive Brand flour, sugar, pastas, etc. to bring in new customers.

"Aisle end-caps featuring in-demand IGA Exclusive Brand products are an effective and relatively easy way to draw shopper attention to our products," says Ross. Take advantage of shoppers' new-found love of baking with an end-cap stocked with IGA Exclusive Brand flour and sugar, and other baking essentials. 

Couple the end-cap with weekly circular and social media messaging around those in-stock and in-demand products to draw new and existing customers into the store. A Facebook post with a photo of the aforementioned end-cap saying, “Searching everywhere for good flour for your sourdough starter or perfected banana bread recipe? Look no further than STORE NAME IGA! We are in-stock and full of quality flour.”

2. Encourage Substitutions in Online and Phone Orders

Ensure your in-stock IGA products get recognition when national brands are out of stock by making them a go-to when orders are placed. Have an eCommerce platform? Talk to your store pickers about suggesting IGA Exclusive Brand products if a requested national brand product is out. Taking curbside pick-up orders by email and phone? Tell shoppers that IGA Exclusive Brand products are the default substitute when a national brand is out of stock or when no brand is specified, like Isom IGA in Isom, Kentucky has been doing. According to Store Owner Gwen Christon, the process has led to a significant and sustained increase in already-high center store Exclusive Brand sales. 

3. Promote Quality & Brand Distinction

"When IGA did extensive testing in 2019 to compare IGA Exclusive Brand to national brands, other private labels, and even international brands, we learned that the IGA product's quality is outstanding," Ross says. "We also learned that shoppers trust that the IGA brand is going to be higher quality and taste better versus other private label options. And in fact, our trust scores were at or above many national brands. To get a trust score like that on a private label brand is unheard of in branding, and that's why our double-your-money-back guarantee is so important. It cements that trust and keeps it at the forefront of shoppers' minds." 

Remind shoppers that a double-money-back guarantee means they have nothing to lose when they try an IGA Exclusive Brand product. Post the guarantee next to your IGA Exclusive Brand end-caps, shelf assortments, and online, and encourage your cashiers and store associates to be well-versed in the guarantee, talking it up whenever they have the chance. If shoppers have any issues or feedback on our Exclusive Brand products, direct them to the Products page of IGA.com. Once they fill out and submit the form, they will be contacted by an IGA customer service representative to initiative the rebate. 

The Next Phase: Transitioning to Recovery

As restaurants begin to reopen, social distancing regulations lessen, and the supply chain stabilizes, how can IGA retailers keep their IGA Exclusive Brand sales strong? The new label look and a host of value and meal-focused promotional opportunities headed to IGA stores this fall is a great start. 

"All the models we're seeing predict that shoppers will remain price sensitive well into 2021, so we have built-in momentum for our new label roll out coming this fall," Groscurth says. "When people see that our brand is evolving to include more shelf stable options, a more modern look, and a bigger focus on meal solutions, we feel like we will continue to resonate with shoppers throughout COVID-19 recovery and beyond.” 

Eager to get that new look on your shelves? The faster retailers go through their private label stock, the faster they’ll get the products with updated branding, Groscurth says. So promote your IGA Exclusive Brand products in-store, online, and in weekly circulars, talk up the guarantee, and get ready for happy shoppers!