Store Brands Will Become More Popular, But Baby Boomers Will Fuel a Surge in the Service Sector

Look for increased use of store brands by retailers and more acceptance of same by consumers in 2006.

“Companies have been upgrading the packaging of private labels, making them more attractive and authentic,” said Dr. Kristy Reynolds, associate professor of marketing at UA’s Culverhouse College of Commerce and the Bruno Professor of Retail Marketing. “Stores have also upgraded the in-store marketing of private labels. Many stores are promoting their own brands through in-store marketing that prominently displays the products.”

Reynolds said consumers, particularly baby boomers, will be more likely to pay for installation and other services in the next year. “Retailers, catching on to this trend, are offering more of these services, which carry high profit margins,” she said, noting that Home Depot and Lowe’s have been expanding their installation services. “Best Buy has implemented a program called the Geek Squad, which consists of employees who will install and help fix home electronics. Even supermarkets are offering entire meals that are already prepared.” In one example, several chains offered the whole Thanksgiving dinner prepped and ready for pick up.

Those same baby boomers will increasingly want experiences when they shop, and they will want to receive experiences as gifts. Bass Pro Shops, Cabela’s, and REI are just three retailers that have capitalized on the trend towards shopping as an experience. Shoppers can try out a new rod and reel in a real pond in Bass Pro Shop or they can scale a rock wall in REI. Consumers are growing tired of the same old things — scarves, sweaters, etc.

The battle between Wal-Mart and Target will continue. A few months ago, Wal-Mart began introducing more upscale products in its housewares, home décor, and clothing departments in hopes of luring more upscale consumers (i.e., Target’s customers) to these departments.

At the same time, Wal-Mart began its holiday advertising and launched its holiday price reductions earlier this year — on Nov. 1 to be exact. Early signs indicate that these strategies have proven successful to Wal-Mart, as Wal-Mart beat out Target in sales increases for November. How this rivalry plays out in 2006 is of keen interest to retailing analysts.

Because shoppers demand the utmost in convenience, many retail companies have found it necessary to move away from the traditional mall. Both JC Penney and Sears have opened off-mall locations, either stand-alone or in strip centers. Shoppers continue to tell researchers that they want to park right in front of a store, get in and get out. Other retailers, such as Zales, will continue to build new stores in strip centers or lifestyle centers.