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Private label growth tied to rise in unemployment?

Investor website, The Money Times, makes a case for linking growth of private label to tough economic times, but will new-found consumer loyalty survive economic recovery?
FILED IN:  Package design  > Structural
As we’ve discussed before, private label is growing, especially in the U.S., with advantages such as lower prices, clever in-store display, and innovative package design for store branding.

The debate continues as to whether this growth will continue or taper off as the recession eases. This article, by Mike Pienciak, cautions investors to watch retailers such as Wal-Mart, Whole Foods and Kroger for their investment potential.

“Already a major force in store brands, Kroger has boosted volume of its own brands by 15% this year, according to a recent AP story. That has helped propel store-brand unit share at Kroger to more than 35%, a record for the company.”

Pienciak makes the same argument we have been hearing for a while. Consumers will be driven to try alternatives to national brands due to “household distress” but will stick because of perceived quality and an emotional bond to the retailer.

This newfound consumer loyalty just might survive an economic recovery.

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