Customers are increasingly looking to private label products when considering which brands to buy, especially as the financial pressures of the pandemic continue, according to a global report by EY.
The Future Consumer Index showed that customers are becoming more careful with their money, providing an opportunity for brands to pivot toward private label products – which typically offer a greater margin than other products.
Private label brands within the home and household care sector, for example, have a current penetration of 12 per cent of the market, while 58 per cent of people are now considering the products.
For packaged food private label currently makes up 20 per cent of the market, and 58 per cent of customers are willing to buy more private label moving forward.
“As Australia finds itself in recession, consumers are now thinking more deeply about what they buy, with private label and store branded products much higher on the shopping list,” said EY Oceania consumer products and retail leader Lisa Nijssen-Smith.
According to the research, 54 per cent of global consumers consider price more important than they did in July. And, looking forward, 64 per cent of customers said they will be cutting back on purchases that they don’t need.
This is going against the advice of many governments, which are urging customers to go out and spend to stimulate the economy, but many people are deciding they would rather not or that they can’t – 45 per cent of people survey said they will stick to buying only essentials for the foreseeable future.
“As more consumers shift their focus to price and value, brands that provide consumers with a product proposition that brings these elements to the forefront, without forgoing customers’ social and environmental expectations, will be well placed to succeed,” Nijssen-Smith said.
“The global pandemic is affecting [customers’] purchasing priorities. Understanding the Covid-19 era consumer’s attitudes and habits is vital to ensure brands not only survive but thrive in these conditions.
The Future Consumer Index is conducted at regular intervals to gauge the impact of Covid-19 on consumers, with the latest Australian survey conducted with 1033 consumers between 15-27 July.