Private label products have become a cornerstone for retailers, offering a strategic advantage in a highly competitive market. These store-branded items not only enhance profit margins but also foster customer loyalty by providing unique, high-quality alternatives to national brands. As consumer interest in private labels continues to grow, driven by their affordability and perceived value, retailers are increasingly investing in these products to meet evolving shopper preferences. This trend underscores the importance of private labels in shaping the retail landscape, as they cater to a more discerning and cost-conscious consumer base.
We know consumer interest and acceptance of strong store brands continues to grow. We also know that every American household has private label products in their pantry or refrigerator. But not every consumer is the same, and retailers need to be intentional in ensuring that they have specific strategies for core consumers across segments. Today we are going to do a quick dive into how US Hispanic consumers engage with private label products and brands.
Frequency of Private Brands Purchase
The average Latino consumer is buying private label products at a consistent level to other critical demographic groups. Nine of 10 Latino consumers buy private label products at least occasionally, and 60% are buying often or always.
Frequency of Buying Private Label Products
(% of respondents)
Among Latino consumers, households with kids are significantly more likely to buy private brands often or more. That is consistent with other demographic segments; however, from a strategic advantage perspective, Latino consumers are significantly more likely to have kids at home (44% vs. 39% among non-Latinos consumers). When probed on better understanding how consumers define frequency, 90% of Latino consumers are buying private label monthly and one-third (34%) are buying weekly. On average, Latino households are buying private label products in 5.1 categories across the store consistently and 28% say they are buying across six or more categories. Among Latino households with children, average purchase rate increases to 5.9 categories purchased, with 34% buying across six or more categories.
The Why Behind the Buy
While price is a driving factor for why consumers buy private label, there are many other attributes that entice consumers to explore retailers’ private label offerings. One the key things to understand is value is more important than price according to consumers trying to optimize their spending. The average US consumer believes that buying private label products provides good value and Latino consumers agree. Among Latino consumers, we do see that value perception increases significantly when looking at higher-income households making $100,000 or more per year.
Perceptions of Private Label
(% of respondents that agree with statement)
We also explored interest in innovation in private label. This is critical for retailers and their manufacturing partners to understand. Latino consumers are significantly more likely to be excited to try new private label products available to them. Among Latino households with kids, interest increases to 63%, more than 10% higher than the average Latino. In addition, middle- and higher-income Latino consumers report more excitement about private label new products. This not only provides insight into the potential types of products where innovation should focus, but also specific retailers and product attributes that cater to higher income shoppers. Natural and organic products, eco-friendly products, or more indulgent, premium flavor profiles create tremendous opportunity for retailers to differentiate to an audience with more disposable income among US Latinos.
Survey findings suggest that Latino consumers are slightly more likely than their general population counterparts to choose a retailer because of their private label assortment and report buying more private label products in more categories than they have in the past. When you dig into nuances across segments in the Latino population, Latino households with kids are significantly more likely than those without to choose one grocery store or another due to their private label assortment (57% vs. 42%). Similarly, they report buying more categories in private label than those without kids (55% vs. 42%).
Middle and higher-income Latino households also indicate that private label assortment will drive their retailer choice for one retailer vs. another. Six of 10 Latino consumers from households making more $100,000 per year state they will choose one retailer over another for their private label assortment, compared to 39% of Latino consumers making under $50,000 per year. Higher income consumers also report that they are buying private label products in more categories versus their lower-income counterparts (55% vs. 42%). With both attributes, higher-income Latino consumers also show much stronger preferences vs their general population counterparts. While Latino consumers tend to report purchase behavior consistent with their general population counterparts, their broader private label perceptions are consistently more positive then their peers across segments.
The H-E-B Mi Tienda Line: A Quick Case Study
A great example of a retailer that has consistently and effectively tailored its private label assortment to varying consumer segments within its footprint is H-E-B. From Hill Country Fare products, named after the region where H-E-B was founded in Central Texas, to its Central Market line, which features local and premium products, the retailer has customized its brands to reach different shoppers with unique products that meet their specific needs. The retailer’s Mi Tienda line was created to help its consumers make authentic Mexican meals at home. In an article in Texas Monthly in November 2023, they shared the thinking behind the Mi Tienda brand and the work that went into creating the brand portfolio. The concept was so well received that it has expanded to include Mi Tienda stores throughout the South Texas area.
The reason this brand has been so successful for H-E-B is because the grocer takes the time to truly understand its consumers at a local level. Texas is the second largest state in the US based on population, yet county to county and region to region, there are tremendous differences in shopper demographics. While the Mexican culture is ingrained throughout all aspects of daily life throughout most of the state, South Texas is a unique region in which more than 80% of the population identifies as Latino, most of Mexican descent. However, in South Texas, the majority of the population descends from families that have lived in the region for generations yet never needed to assimilate completely. Over the decades, the culture has become something unique – integrating traditions, music, and flavors that include components from the German and Irish settlers that came to the region, while maintaining critical elements of the Mexican culture that have always been there. Many Latino consumers identify as Tejano – illustrating the unique intersection of what makes Texas unique while maintaining the beauty of generations of Mexican culture.
H-E-B has an uncanny ability to understand the nuance within this population, and the Mi Tienda line touches on something important within their shopper base. They enable shoppers to feel seen and appreciated, and as such, its shoppers appreciate the retailer. H-E-B inherently recognizes how private label drives loyalty among Latino consumers and provides a strong case study for one way to meet its shoppers’ needs.
What does this mean for my business
As H-E-B has illustrated, private label products present a significant opportunity for retailers to enhance their market position and cater to the evolving preferences of consumers, particularly within the US Hispanic demographic. To capitalize on this trend, retailers should focus on several key strategies:
Targeted Communication: Whether through personalized retailer media campaigns, or classic marketing communications, emphasize the value and quality of private label products when targeting Hispanic consumers.
Product Innovation: Invest in creating innovative private label products, especially in categories like natural, organic, and premium items which appeal to higher-income households and those with children. Also, look to prioritize innovation in categories that over index among families to ensure unique offerings tailored to Latino households with kids.
Diverse Assortment: Ensure a broad and diverse assortment of private label products across multiple categories to meet the varied needs of Hispanic households, particularly those with children.
Value Proposition: Highlight the value proposition of private label products, not just in terms of price but also quality and unique attributes that differentiate them from national brands.
Retailer Choice: Leverage private label assortments to influence retailer choice among Hispanic consumers, particularly those in higher income brackets who show a strong preference for stores with robust private label offerings.
By implementing these recommendations, retailers can strengthen their connection with Hispanic consumers, drive loyalty, and boost their market share in the competitive retail landscape.
Findings shared in this blog are from PDG Insights 2024 US Hispanic Pulse Study. This is a collaborative survey concept that was designed for brands and retailers with limited budgets to cost-effectively explore how US Latinos compare to the General Population on topical concepts, key trends, and custom brand, merchandising, and marketing strategies, while tracking behavior over time. The next wave will be fielded in November 2024. Reach out to Diana Leza Sheehan, founder of PDG Insights, to learn more about if our Collaborative Surveys can help you meet your learning agenda needs.
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