Covetrus

8 Covetrus | ph: 855.724.3461 | fx: 888.329.3861 | cvet.co/shop The rising trend of private brands Taking a closer look at private brands Today, private or store-labeled brands are seeing unprecedented growth as companies invest more time and resources in developing and positioning their own private brand products to match the quality and reputation of established national brands. Market expansion by retailers has given consumers access to a greater variety of brands. Combine this with the digital economy we live in, and we have more choices than we could possibly ever need. As a result, consumers want fewer options when trying to make a purchase decision. Studies show that consumers are stressed by the abundance of choices available to them, which causes what is known as "decision fatigue." Consumers want streamlined options from brands they can trust. A private brand that extends across a variety of product categories can make shopping easier on consumers who want lower-cost, high-quality items. The rise of private brands Consumer behavior is changing. People want more value for their money and recognize the improved quality of many private brand offerings. Consumer confidence in private brands continues to grow as U.S. private-branded products showed two percent growth in 2017, outperforming branded tiers. In fact, private brands are growing three times the rate of national brands, with shares projected to grow to 25 percent in the next decade. One of the key drivers for the growth of private brands is the vertical integration of retailers and distributors. As companies vertically integrate, they uncomplicate the process of getting products into the hands of consumers. This translates to cost-saving alternatives in a variety of product categories. Millennials in particular are more willing to buy less expensive products. They have lower incomes and spending power, so for this demographic, value shopping is critical. Millennials are more likely to compare ingredients, and when they're the same or very similar, they don't want to pay more than necessary. Consumers aren't foolish — if a company offers a sub-par quality product, that perception will reflect negatively on the company that produced and distributed it to market. As such, the quality of private brand products has increased in recent years. Private brands in veterinary care How does all of this translate to the veterinary care industry? In a time of flat industry growth, many veterinary hospitals have relied on service fee increases to drive incremental growth within their individual practices. Unfortunately, recent market studies have shown a direct correlation between rising fee schedules and decreased veterinary visits. This should come as no surprise, as cost-conscious millennials have now become the largest demographic of pet owners in the market.

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