“Inflationomics” Is Driving Consumers To Store Brands

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Last year’s “temporary” spike in inflation is well on its way to becoming this year’s new normal. That’s bad news for the economy as a whole, but good news for the burgeoning private label business.

According to a new survey by First Insight, three out of four consumers say their confidence about spending has been eroded by rising prices and the prospect of more to come.

 

In spite of robust wage hikes and low unemployment, more than 80% reported that inflation has them shopping by price.

 

That’s a shift from a year ago when the economy was awash with stimulus money and consumers went on a spree of pent-up demand and so-called “revenge spending.”

 

Significantly for future consumer behavior, four out of ten surveyed said they are cutting back on name brands.

 

This is an acceleration of a trend that was already developing. Last year, retailers in the U.S. offered an average of more than 4,500 private label products online, and private label brand penetration was more than 13%, according to retail analytics firm DataWeave. 

 

According to the Private Label Manufacturers Association, private label sales hit a record $199 billion in 2021, a 1% increase from 2020.

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