Contrary to what market analysts would predict, own-label store products are not doing well in discount supermarkets which would seem to be logical in tough economic times. On the other hand, sales of own-label products are actually doing surprisingly well at higher end stores.
In comparison to the seven weeks prior to 7 August, grocery sales were up by 3.8% over the same period in 2010 however they were lower than the previous four weeks that showed an increase of 4.6%. Research conducted by Kantar Worldpanel indicates that trends are not what would normally be expected.
Over a three month period, grocery inflation rose to 5.2% which is up from 4.8%, with two months in a row showing marked increases in prices. The trading down trend is doing quite well however even though own-label discount stores are seeing a reduction in profits.
The research further indicated that no frills supermarket chains such as Aldi continue to show profits but for the most part it is through trading down as opposed to sales of own-label products. The market research firm also is baffled that these discount stores are doing well but not in own-label products.
Normally when consumers are in the midst of a downturn in the economy they turn to such things as own-label discounts to cut the cost of groceries, but this trend is not evident this time around. During the last recession in 2008 the sales of value products and own-label products skyrocketed but this has not happened as yet in 2011.
It just may be that budget, value and own-label products are seen as cheap and for a reason. Whatever motivates shoppers at this point in time to stick with more expensive groceries is unclear, but the fact is, we are not seeing trending to value goods as we did in the past.
