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eCommerce Performance Analytics for CPG Private Label

12th Apr, 2022

 

By Nadir

The combination of economic uncertainty, inflation, and perceived affordability has increased consumer’s willingness to buy and try more private label products, challenging National brands to differentiate their eCommerce strategies, especially those related to price positioning, in other ways.

Our previously released report, Inflation Accelerates Private Label Share and Penetration, confirmed 8 out of 10 brands with the highest SKU count carried across all grocery retailer websites to be private label, signaling the strength of their digital Share of Voice. Given the growing shift in consumer preference toward private label brands, we are providing access to the latest trends seen from September 2021 through March 2022. Below you will find a summary of what the data revealed about the growing presence of private label brands on the Digital Shelf.

Private Label Account and Category Penetration

We analyzed private label penetration at an account level to understand which private label brands have the greatest presence on retailer digital shelves, and to see which retailers may be leaving product assortment opportunities on the table.

Private Label Penetration Across Retail Grocer Websites

As a retailer, it is important to understand how your private label penetration stacks up against the industry average at a category level, especially given the performance tracked for retailers included within our analysis and the vast number of SKUs they offer online (over 20,000).

Private Label Penetration by Category Across Retail Grocer Websites

The Private Label and National Brand Price Gap Widens

Private label brands tried out of necessity mid-pandemic increased in popularity as grocery prices continued to rise, providing an opportunity for retailers to increase brand affinity and loyalty for their online shoppers. Retailers alike were able to keep affordability at the forefront of their strategies and maintain a price gap of 23% or more, despite inflationary pressures to increase prices.

Private Label / National Brand Price Gap by Retailer

Looking at the results at a category level, we can see that Meat is the only category found within our analysis where private label brands are priced higher than National brands at an average of 8% greater. The Alcohol & Beverages category tends to always see the greatest price gap between private label and National brands given the price variances by unit (ranging from under $10 to over $100), in this case averaging a 148% price gap.

Private Label & National Brand Price Gap by Category

Private Label Total Basket Value Comparison Across Retailers

While SKU-level pricing is extremely important to product strategy, for a retailer, it is equally as important to be as mindful of the total basket value even more so now as consumers further their private label loyalty across various categories. A few SKU-level missteps in pricing decisions can exacerbate cart abandonment and negatively impact shopper loyalty in a world where prices can be compared instantly in the palm of your hand.

Based on our analysis, Walmart and H-E-B private label products offered the lowest priced total basket of goods at $42.90 and $45.06 respectively, whereas AmazonFresh and Safeway offered the highest total at $73.19 and $69.52 respectively.

Private Label Item Level Price Comparison by Retailer

Inflation-driven Price Changes are on the Rise with Room to Grow

Based on the 20,000+ SKUs analyzed, we saw a continual price increase every month since September 2021 when comparing future monthly prices to those we tracked in September. The greatest price increase happened in March 2022 at 12.5% on average, however, there are still 48% of SKUs that have yet to see a price increase even as inflationary pressures rise.

When viewing the split between National and private label brand price increases in March 2022 versus September 2021, we saw National brands increased prices on average by 13% where private label brand prices only increased an average of 7%.

Private Label & National Brand Price Change
Private Label & National Brand Price Change (%)

Price decreases are still occurring across all categories, despite inflation, but to varying degrees ranging from 5% for Deli items to 17% for Dairy & Eggs. Within the Dairy & Eggs and Pantry categories, private label brands reduced prices for an additional 10% of total SKUs compared to National brands.

The greatest category of opportunity for price increases within private label were found within Beauty & Personal Care with 67% of private label products yet to see a price change since September 2021.

Price Change (%) by Category and Brand Type

Private Label Price Change Correlation to Product Availability

The category with the greatest magnitude of price increase seen within private label brands occurred within Baby at 16.3% followed by Home at 14.3% on average. Private label products within Home and Baby categories were also showing the lowest availability rates, 75.9% and 79.5% respectively, indicating a high demand for these items even as prices increased.

The private label categories with the smallest price increase on average were Dairy & Eggs at 2.4% and Other Foods and Pantry at 3.4% and 3.6%, respectively.

Private Label Price Change Magnitude & Availability
Private Label Price Change Magnitude & Availability

While in many accounts both private label and National brands struggled with stock availability in March 2022, National brand availability is much lower (around 10% on average) than private label availability.

H-E-B had the lowest overall product availability at 76% across both private label and National brands on average. Only Walmart had lower availability for Private Label at 75% compared to 93% for National brands, but they also had the greatest price gap between private label and National brands.

Private Label & National Brand Product Stock Availability

The Future of eCommerce Growth for Private Label

Our greatest learning from this analysis is that it’s time for retailers to start thinking and planning more like the National brands they carry when it comes to positioning their private label brands for success. Successful retailers are taking this time to reset their private-label strategies and transfer short-term switching behavior into long-term customer loyalty.

Retailers playing catch up have the opportunity to address some of the gaps highlighted throughout this analysis, for example, relative to pricing and assortment changes. Below are some of the highlighted opportunities:

  • Though inflation is driving price hikes, more than 50% of products analyzed have yet to see a price increase indicating an opportunity to protect margin
  • Narrowing the price gap between a store’s brand and National brands should not be the only focus as competitive private label brands are becoming a greater threat at a category and basket level
  • Modifying and expanding assortments as demand increases for private label can improve customer retention and loyalty, especially for cross-shopping consumers

According to The Food Industry Association (FMI), only 20% of food retailers currently promote private brands on their homepages, and only 48% include detailed product descriptions indicating even more opportunities left on the table for retailers to optimize private label digital performance.

Many leading retailers are leveraging real-time digital marketplace insights and eCommerce analytics solutions like ours to further their online brand presence and optimize sales performance. This report highlights only a small sample of the types of near real-time insights we provide our clients to effectively build competing strategies, make smarter pricing and merchandising decisions, and accomplish eCommerce growth goals. Be sure to reach out to our Retail Analytics experts for access to more details regarding the above analysis.

For access to a previously recorded webinar presented in partnership with the Private Label Manufacturers Association and conducted by DataWeave’s President and COO, Krish Thyagarajan, click here.

- Nadir Islam
Business Analyst at DataWeave, 12th Apr, 2022

Amazon E Commerce Market Share Online sales out-of-stock price perception pricing analytics Pricing insights Pricing Strategies Private Label Product Assortment Product Availability promotional strategies Retail Strategy US

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