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A global Datamonitor consumer survey conducted in August 2010 found that 44% of U.S. consumers either tend to agree or strongly agree that they are spending more on private labels than they were in 2009. This data has significant implications for personal care products. Private label purchases might initially be motivated by a desire to save money, but, once purchased, many consumers find the quality of these products comparable to more expensive, branded equivalents. In fact, 66% of consumers in the global survey felt private label grooming products are at least as good as well-known, market-leading brands—which could be of concern to national and global brand owners pushing quality credentials.
Under these circumstances, these brands are going to have to work harder to differentiate their products if they want to win back consumers who have experimented with private labels during belt-tightening times.
The downturn has undoubtedly had a major effect on private label popularity, but this is not merely a recession-driven phenomenon. In many developed markets, private labels were already highly structured and sophisticated before the onset of the global economic crisis.
While brand owners can expect some consumers to migrate back to national brands when economic conditions improve, it is anticipated this will likely not be enough to offset the gains private label has made in many personal care categories.