Survey: High prices still fueling private label purchases; most buyers 'satisfied'
Price remains the most important factor in purchasing decisions, leading to consumers opting for private label options more often.
That’s according to the 15th edition of the EY Future Consumer Index (FCI), which found that nearly three-quarters (73%) of U.S. consumers have changed their buying habits due to price increases in the past year.
An even larger number (76%) of U.S. consumers now say private label products are helping them save money (+9 percentage points increase compared with September 2023). Seventy-two percent of U.S. consumers believe private label products “satisfy their needs” just as much as name brands.
Of the U.S. consumers making the switch to store brands, nearly two-thirds (63%) have observed an increase in price of private label options at their preferred stores, showing that although private brands are often a less expensive option, prices are rising across the board.
Despite the increase in private label adoption for cost reasons, more than 55% of shoppers are switching back to branded options after trying a private label. Consumers say they prefer name brands for their “superior quality, value and reliability.”
Seventy-one percent of consumers will choose a different brand if their preferred option is unavailable, while 65% would switch for a better price, and 59% say they are usually open to trying new brands. More than half (54%) of Gen Z and millennial shoppers are more likely to switch to other brands, representing the highest proportion of switchers and making them the most vulnerable segment. Meanwhile, 24% of older generation shoppers in the U.S. are more likely to reject trying a new brand.
"Brands that understand the price-value equation for consumers will be able to handle the headwinds they are facing and deliver on growth in the years to come," says Rob Holston, EY Global and America's consumer products sector leader. "Despite the agility of some brand leaders in adjusting the uncertainty within their existing portfolio, there is an accelerating need to balance inorganic and organic growth to maintain relevance with both capital markets and consumers."
[READ MORE: Survey: Grocery costs remain biggest painpoint for consumers]
Additional survey findings include:
- In the U.S., shoppers have cited that they are most likely to reduce purchase quantities or opt for smaller sizes in snacks and confectionery (36%), alcoholic beverages (35%), and dining out or ordering takeout (35%). In contrast, they are least likely to do so in fresh food (32%), home and household care (32%), and clothing and footwear (31%).
- Fifty-six percent of older consumers (Gen X and baby boomers) shop at discount retailers, warehouse clubs or supermarkets, compared with 44% of younger consumers (Gen Z and millennials) in the U.S.
- Fifty-one percent of consumers don't feel that brand marketing messages are doing a good job of resonating with their needs and values. Nearly half (46%) of U.S. consumers remain skeptical of product improvements (such as changing ingredients or formulas), often perceiving them as cost-cutting measures.
EY’s report surveying 20,000 consumers across 26 countries, including 1,500 in the U.S.
