Private Label Shadowed by Recession?

Media coverage of the private label product market has focused primarily on the effects of the recession on sales growth and volume. The march of private label, however, is much more complicated to analyze, says Harvey Hartman, founder, chairman and CEO of the Hartman Group, in his Executive HartBeat newsletter.

Hartman's notes sales data can show only one aspect of the market's health, but it cannot explain why the market behaves as it does. While the recession has surely had some effect on private label products, Hartman argues pinpoint the exact effect is not simple. Have private label goods made gains because consumers are trading down from big-name brands or rather in reaction to skyrocketing food prices? Or are private label sales slowing, as consumers sacrifice to get beloved brands.

"Most frustrating of all, we find that most private label discussions tend to omit half of the story, treating private label as if it were a homogeneous, generalizable organism thriving amid a standardized ecosystem," Hartman quips. Each retailer approaches private label differently, and some private label brands stand above so-called name brands, making it tough to analyze them in the same breath as no-frills private label products. Still some retailers use on premium private label brand across many product categories, while other retailers use several such brands to appeal to specific consumers for each product category. There are many complexities to the pros and cons of each approach, but this clearly shows the private label market is no simple read, certainly one that centers on the effects of the recession.