Canada’s retail landscape has shifted significantly towards private-label brands in recent years, a trend highlighted in Kantar’s Canadian ShopperScape study. Amid rising prices and high inflation, Canadian shoppers are increasingly turning to store brands to manage their budgets without compromising quality. This movement is not just about saving money; it reflects a deeper change in shopper perceptions and shopping habits. From the allure of organic options to the promise of innovation and the quest for sustainability, private-label brands are reshaping the retail experience across the country.
The budget-conscious shopper
The primary driver behind the surge in private-label purchases is economic: Shoppers are seeking ways to stretch their dollars further. Our study reveals the appeal of store-brand products lies in their ability to help shoppers manage their budgets amid rising prices. This is a universal concern that transcends demographic boundaries, affecting choices across all age groups and income levels. This is benefitting retailers in several ways:
- Cost efficiency: The lower prices of private-label products factor significantly in their popularity, offering shoppers a practical way to manage their household budgets.
- Retailer loyalty: The affordability of store brands is not just influencing product choice. It is also shaping where Canadians choose to shop, with certain grocery retailers gaining an edge because of their private-label offerings.
- Organic accessibility: With more affordable organic private-label products on the shelf, a broader range of shoppers can access healthier options, enhancing shopper satisfaction and loyalty.
Innovation and quality
Contrary to past perceptions, today’s private-label products are not just about basic value. In fact, shoppers increasingly see private-label items as innovative and of high quality. Younger Canadians, in particular, view store brands as affordable alternatives to premium products, highlighting a shift towards innovation in the private-label sector. Shoppers recognize retailers such as Walmart and Giant Tiger for their unique and innovative private-label offerings, challenging the traditional dominance of national brands. This has led to a number of changed perceptions about private-label brands, including:
- Perceived quality. The quality of private-label goods often matches or even surpasses that of national brands, especially at retailers such as Costco that are known for their high standards.
- Innovation as draw. Innovative private-label products are attracting shoppers, particularly younger ones, looking for unique and affordable options.
- Category leaders. Snacks, shelf-stable groceries, and frozen foods have emerged as the main categories in which store brands dominate, indicating areas of potential growth and innovation.
Social and environmental responsibility
Environmental and social issues are increasingly important to Canadian shoppers, particularly among younger demographics, such as Gen Z. Given that prominent private-label brands have been slower to make substantial inroads here, national brands have an opportunity to distinguish themselves by addressing these concerns. This area could become a competitive advantage for national brands willing to invest in environmental, social and governance (ESG) initiatives. The benefits include:
- ESG as a competitive edge. National brands can gain a competitive edge over private-label brands by prioritizing ESG initiatives that resonate with the values of younger shoppers.
- Consumer trust. Developing trust in the retailer and its products is paramount. Retailers that align their private-label offerings with social and environmental values are likely to foster deeper trust and loyalty among shoppers.
- Quality and sustainability. The intersection of quality, innovation, and sustainability is where private-label brands can truly excel, meeting the demands of a more conscious shopper base.
Private-label brands in Canada are at a crossroads, with economic pressures, innovation, and social responsibility shaping their evolution. As these brands continue to adapt and respond to shopper demands, they not only reflect changing market dynamics, but also signal a future in which affordability, quality, and sustainability are not mutually exclusive.
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View our full Kantar BrandZ 2024 Most Valuable Canadian Brands report here