Check your pantry, your fridge, or your shopping cart the next time you get groceries. How many products from the national brands that you grew up with do you have – and how many are store brands?
If you’re like the average shopper, nearly one out of every four products is a store brand.
That’s a new record, according to the Private Label Manufacturers Association. Its newest annual report has found that an all-time high of 23.5% of all grocery products sold last year were private label products. The percentage of grocery dollars spent on store brands was only slightly less, at 21.3%.
Overall, sales of private label products in all retail outlets rose more than $9 billion, to a record-high $282.8 billion.
And as store brands are growing, national brands’ dominance is slipping. The total number of store brand products sold last year rose more than half a percent, to 68.7 billion units, while national brands declined by about a half percent. In total dollars, store brand sales increased 3.3%, nearly three times the 1.2% growth rate of national brands.
“Store brands are outperforming national brands across the U.S., growing faster, expanding share, and delivering record-setting sales results,” PLMA President Peggy Davies said in a statement.
A survey by FMI – The Food Industry Association last summer found that more than half of all shoppers said store brands were very or extremely important in deciding where to shop. While most store-brand buyers said value and affordability drives their decisions, nearly half said they’re very likely to continue purchasing private brands even if grocery prices fall. “This indicates that shopper loyalty to these brands is strong and no longer based only on price,” FMI concluded.
Shoppers seem particularly pleased with store-brand refrigerated foods and pet care products, according to the PLMA. Private label pet care product sales increased more than any other category, with 5.4% more units sold last year. In dollar sales, store brand products in the refrigerated department saw the highest gains, up 6.1%.
Retailers still have some work to do, however, in getting shoppers to buy some store brand products. In the FMI survey, shoppers said they were least likely to buy store brands in the pet food, coffee/tea, and health and beauty care categories.
FMI found that 86% of retailers and manufacturers planned to increase their investments in private brands over the next two years. And some that have done so recently, are already seeing success. A new report from Numerator ranked the ten fastest-growing private label brands of the past year, and each of the top four were just a year old – Target’s Gigglescape and Dealworthy, CVS’s Well Market and Walmart’s Bettergoods. ALDI dominated the rest of the list, with four of its brands making it into the top ten.
“Private label growth reflects a shift in consumer priorities,” the PLMA’s Davies concluded, “as retailer-owned brands increasingly compete — and win — on value, quality, health, and sustainability, not just price.”
Low prices may have enticed many shoppers to switch brands. Being happy with their purchases is what’s likely to turn them from one-time buyers into repeat customers. And if that trend continues, store brands making up one in four of your grocery products could be just the start.
Image source: Walmart
