How will price inflation impact shopper choice

Last week we looked at the dynamics of Private Label and how that differs by country relative to brand investment. But how will price inflation impact shopper choice? What can we learn from current and previous experience?

1. Significant and sudden price inflation is shown to drive private label share
   In the 2008 ‘credit crunch’ period Food price inflation spiked in Western Europe rising quickly from around 2% to 8%. This sudden change and its magnitude made shoppers think about their choices and Private Label gained a share point before resuming its prior growth path.
2. Private label grows more in high PL share categories – even more in hard times
   Over the ‘credit crunch’ recession period PL shares increased significantly. The biggest increase in every country came in categories where PL was already strong relative to branded options. Make sure you invest in your brands to maintain difference, innovation and value for money.
3. National brand investment is a critical factor in category private label share
   Steenkamp et al emphasize 4 key drivers of Private Label share by category – brand advertising, brand trust, brand value for money and brand innovation. Where shoppers perceive these to be low, PL share is 70% higher. Our latest BG20 purchase data confirms this for innovation.