When it comes to deep discounters, store brands comprise a majority share of sales in three departments: dairy (72%), grocery (52%) and frozen food (53%). According to Nielsen, this is driven by both penetration and trips, with consumers making more trips to purchase store-brand grocery, dairy and frozen products (up 3.3%, 5.7% and 3.7% in trips, respectively, compared to the prior year) than trips made for branded products from these departments.
“Deep discount grocery retailers are certainly reaping the benefits of having a robust store-brand presence within their stores. With consumers taking three times more trips including store-brand purchases to deep discount grocery stores compared to other channels, like mass merchandise or dollar stores, opportunity for growth should only continue to rise,” Nielsen states.
While deep discounters have significantly high store-brand growth, there is still room for penetration growth across all retail channels. Whether a deep discounter, a traditional supermarket or an online channel, retailers should continue to keep store-brand strategy front and center as a way to offer consumers the value and quality they’re looking for at price points that resonate with their wallets.
“While consumers are taking more trips across most retail channels, deep discount grocery is seeing some of the largest increases in shopper activity. In fact, while trips across all channels are up 0.5%, shoppers took 2.8% more trips to deep discounters over the last year. However, only about 40% of households shop at deep discounters, which is much lower compared to more established channels like supermarkets and mass merchandisers. For deep discounters, there are still significant opportunities for growth ahead, unlike the already saturated conventional grocery channel,” according to Nielsen.
What’s more, deep discount grocery and online channels were among the top growing beneficiaries of consumer spend leakage from mass merchandisers. With online grocery sales anticipated to reach USD100 billion by 2025, e-commerce will continue to siphon off sales from other channels. Part of the reason consumers are going online is because they’re seeing value, spending more per trip on store-brand purchases made online (USD17 average) compared to the total average basket spend on store brands across all channels (USD12 average).
