Tuesday, January 19, 2021
Branded goods are booming
Consumers are not saving in the pandemic
Despite short-time working and fears about the future, consumers are spending more money on food in the corona crisis. The low-priced own brands in retail are losing market share. One reason: In the pandemic, much of what makes life worth living has broken away – many want to compensate for that to some extent.
In the pandemic in Germany, the supermarket is not saving: In the Corona year 2020, consumers reached for branded goods much more often than before the crisis. "People wanted to have a good time at home, where they had to spend most of their time due to the lockdown, and were willing to spend more money on food, drinks and detergents, cleaning products," explains GfK retail expert Robert Kecskes the trend. For him, 2020 is "the year of the brand."
According to the figures from the market researcher GfK, households in Germany spent an average of 10 percent more money on branded items in the Corona year 2020 than in 2019. The retail's own brands could not quite keep up with this rapid growth and lost market share – at least in most categories . The success of branded articles is not self-evident. Because short-time work and fear of the future would have expected something else. After all, consumers in Germany had signaled great confidence in retailers' own brands just before the outbreak of the crisis.
In a survey carried out jointly by the trade journal "Lebensmittel Zeitung" and the market research company Ipsos, around 96 percent of consumers stated that they bought private labels at the beginning of February 2020. According to their own statements, two thirds trusted them as much as they did the manufacturer's brands. And almost one in ten even thought it was more trustworthy than the more expensive competition. But with the crisis, many consumers apparently returned to the strong brands.
Fear of neglecting the home office
For the psychologist Stephan Grünewald from the Rheingold Institute in Cologne, who tries to fathom the mood in the population with depth psychological interviews, this buying behavior is quite understandable. "Corona is associated with great experiences of fainting because we cannot see, smell or taste the danger," he explains. Branded products promise stability in this situation. "We have known them since childhood. They have lasted for decades and survived many crises. That is why they convey a feeling of security, especially in the pandemic." In addition, a lot of things that otherwise made life worth living broke away in the pandemic – such as stadiums, disco visits or travel. Consumers wanted to compensate for that at least to some extent. "We want to comfort ourselves and pamper ourselves and then like to resort to the more expensive branded products – in the hope of regaining some of the lost sensuality."
And according to the psychologist, something else played into the hands of branded companies: "There is a widespread fear of being neglected in the home office in baggy pants," he observes. Shopping at Edeka and Rewe is gaining a new meaning as a demonstration of one's own sophistication. "And that is simply better with branded products." The retail expert from market researcher Nielsen, Fred Hogen, also sees a trend towards more conscious nutrition among consumers in Germany in the pandemic. "Organic products, vegetarian and vegan foods have experienced a real boom."
In many cases there is no shortage of money
The branded companies also benefited from the changed shopping habits in the Corona crisis. Because for fear of a corona infection, many consumers are currently doing their shopping in a single shop if possible and avoid going to a second or third shop. This is currently bringing additional customers to the supermarkets with their diverse product ranges. And there the temptation to use branded products is much greater than at the discounter.
In many cases there was no shortage of money. After all, many restaurant visits had to be canceled due to the pandemic and numerous vacation trips had to be postponed. Are branded articles on the rise everywhere? Not quite: there are exceptions. In the cosmetics and personal care sector, for example, in 2020 it was the branded goods manufacturers who came under the wheels. Because the lockdown and the triumph of the home office reduced the importance of cosmetic products and parts of body care. "They weren't needed that often, and when they were needed, the cheaper private label was often sufficient," said Kecskes.
Despite the current success of branded goods manufacturers, Kecskes does not want to rule out a resurgence of the retail's own brands. Currently, the economic effects of the pandemic have not yet reached most households. But the situation will probably become more difficult in the future and money will become scarcer in many households. "This will be a chance for the private label to make a comeback," he believes.
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