ppod_citn-728x90
ppod_citn-320x100

Grocery inflation may be easing – but shoppers’ growing preference for less-expensive store brands is not.

New figures reported by the Private Label Manufacturers Association show that private label sales reached another new record last year, soaring by $9 billion to a total of $271 billion. That represents a 3.9% rise in dollar sales, as compared to 1% growth in national brand sales.

So even though the dollar value of store and name brand sales are both up, largely due to higher overall grocery prices, store brand sales are rising a lot faster.

Shortages of their favorite national brands and rising grocery prices during the Covid pandemic prompted many shoppers to give store brands a try. And many who did, have never gone back. Over the past four years, the PLMA says store brand dollar sales have increased by more than $51 billion, a gain of nearly 24%. During that time, unit sales of store brand items also rose, by 2.3%, while national brands fell 6.8%.

A separate report from NIQ found that private label brands made up 22% of grocery spending last year, meaning more than one in every five dollars spent at the grocery store was spent on store brand products. “Economic uncertainties and the rising appetite for value and innovation are fueling private label growth,” NIQ found. Half of all grocery shoppers surveyed said they’re buying more private label products now than ever before.

But “private labels are no longer just a low-cost alternative,” NIQ went on. Shoppers may have come for the low prices, but they’re staying because they like what they’re getting. 40% of shoppers said they would buy a private label product they enjoy even if it costs more.

ppod_672x560

And stores are ready to capitalize on shoppers’ interest.

Dollar General has announced that it will be expanding its store brand selection. It currently offers more than 3,200 private brand products, and now plans to offer about 100 more in the coming months.

“Our customers can’t afford to make a mistake when shopping. They need the value that our private brands offer, but with the assurance that the products will meet or exceed their quality expectations,” Dollar General’s vice president of consumer insights and branding Angela Martin said in a statement. “Customers don’t want to feel like they are settling.”

Grocery wholesaler United Natural Foods also sees a bright future for private brands, estimating that sales will grow by 40% over the next six years. “Private brands continue to gain traction among shoppers due to their competitive pricing, improved quality, and increased innovation,” UNFI said. “To capitalize on this trend, retailers should consider a clear private brand strategy that communicates the value – and differentiators – of their private brand products to their shoppers.”

That advice was echoed in a recent report by McKinsey. “Historically, U.S. retailers have positioned private brands as affordable consumer options,” it said. But “leading retailers have made tremendous investments in private-brand capabilities and offerings.” As a result, the best private label products “are appealing to customers not just because of price and affordability; these brands are now also becoming known for their quality.”

Everyone likes saving money. And it helps when you like what you’re getting for your money. Retailers have worked hard to get you to switch to store brands – so national brands may soon have to work just as hard to try to win you back.

Image source: ALDI

One Comment

  1. If you shop at Wegman’s, you literally have no other choice. Wegman’s slowly got rid of manufacturer’s products, forcing the consumer to either buy their overpriced store brands, or get nothing at all. And their stuff is not that great.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Privacy Policy
Disclosure Policy