Food and health: Consumers switch to store brands

12-Jul-2009 - Last updated on 13-Jul-2009 at 15:19 GMT

Food and health goods rank top of the list of products that American consumers are most willing to try to save money on by switching their regular brands for store brands, according to a recent survey.

Conducted by ICOM, a division of Epsilon Targeting, the survey revealed that the “threat of exodus to store brands” varies significantly by category.

“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” said ICOM marketing director Warren Storey.

The survey of 1,530 consumers, conducted in May this year, revealed that almost 60 percent of Americans have switched to store brands and away from national brands in the previous six months.

Health priorities

The next categories most likely to take the hit from consumers trying to save a few pennies are health products and personal care products, with almost half of all participants surveyed saying they had switched to store brands.

Specifically, the health product category, which includes over-the-counter medicinal healthcare items, provides interesting insight into consumer attitudes to spending on products targeting different health conditions.

In descending order, consumers were more likely to switch to store brands for pain relievers, cold and cough remedies, allergy remedies and heartburn medication. According to ICOM, its findings in this area reveal a direct correlation between the severity and specificity of an ailment and consumer openness to switch.

Although no figures were provided for dietary supplement usage, the findings do provide fertile ground for more consumer research.

“Perceived risk, that’s what is driving these key consumer decisions. This is the kind of insight that national brands can use to reach customers with promotions that meet their needs and bring them back,” said Storey.

“These results highlight that understanding customer psychology, and tailoring promotions accordingly, is a significantly more effective win-back strategy than scatter-shot, one-size-fits-all offers.”

Coupons

Another ICOM survey conducted in April found that consumers are also more open to using coupons compared to a year ago. Some 87 percent of respondents said they were using the same amount or more coupons than a year earlier.

And out of those who use coupons, the large majority identifies coupons with the grocery store as the place of redemption.