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Customers Defect From National Brands

Half of American consumers have defected from national brands to store brands for food, household, health and personal-care products, but most are still reluctant to switch to store brands for child- and pet-care purchases, according to research from ICOM released on July 9, 2009.

Consumers Switching to Store Brands
A May 2009 ICOM study of 1,530 American consumers revealed key differences for store-brand switching by category by asking consumers whether they had switched away from national brands to store brands in the preceding six months.

The survey found that nearly 60% of consumers switched to store brands for food, while almost half switched for health and personal-care products (48% for each).

A separate ICOM survey in April firmly established the grocery store as the epicenter of the American consumer’s coupon activity. In that survey of 1,827 Americans, 86.5% of respondents who said they had used coupons in the last month identified the grocery store as the place of redemption. The grocery far outpaced its closest competitors, which included restaurants at 46.5%, department stores and mass merchants such as Wal-Mart at 41.3%, and drug stores at 34.9%.

Not that long ago some consumers felt stigmatized by coupon usage. The recession may have changed that. Fully 86.8% of respondents in the April survey said they are using the same amount or more coupons than they used a year ago. One out of three said unequivocally they’re using more coupons than a year ago.

“The good news for national brands is that there is, in fact, an opportunity to win back customers who have switched. Some marketers were worried they’ll never return. But the win-back depends on knowing who is switching and why, and responding with targeted incentives based on that strategic information,” Storey said.

In another sign of the times, survey respondents made it clear that customer loyalty rewards supporting basic household purchasing are the most appealing. That means groceries and gasoline. 70% of respondents said they’re interested in getting rewards at the grocery, 60.7% said gasoline. The next closest categories were retail stores at 41.2%, household products at 40.3% and travel at 29.3%.

Research Methodology
ICOM`s April and May surveys were sent to 70,000 households nationwide. The
1,827 survey participants in April represent a 2.61% response rate. The 1,530
survey participants in May represent a 2.19% response rate. Epsilon Targeting,
the new data division of Epsilon, combines the collective resources of Epsilon
Data Services, ICOM and Abacus to form the industry`s largest set of data