Dive Brief:
- More than half of consumers are loyal to a specific store due to its private label brands, according to a report from retail consulting firm Daymon. The report also found that 85% of consumers say they trust a private brand just as much as a national brand, and 81% say they purchase a private brand product during every shopping trip.
- Private brand dollar sales grew 4% in 2018, nearly six times the growth of national brand sales. This growth was present in food, household, pet, beauty and personal care categories.
- The report also noted that 20% of sales growth in private brands comes from products that are branded premium, trendy or organic. About 41% percent of consumers would like to see more better-for-you products and 44% want more unique attributes.
Dive Insight:
Private label brands were once seen as value products with lower quality, but the tables have turned as private label growth is now outpacing national brands and surging in popularity among shoppers. Now, more retailers are investing in private label products and tailoring their assortments to meet consumer demands.
According to the study, consumers want more premium and organic products from their favorite private label brands. Developing more of these offerings is also beneficial to retailers because they generate more revenue. In fact, premium private label sales accounted for nearly one-third of dollar volume and drove 8% of growth in the segment in 2017.
Many retailers are testing ways to shake up their private label brand portfolios and keep their offerings on-trend, including Natural Grocers, which unveiled a new line of pantry staples, frozen and fresh items that are focused on organic ingredients. California-based grocer Raley’s has also relaunched its entire private label program to include fresh packaging that is more transparent. SpartanNash recently unveiled plans to clean up its private label lines to offer fewer processed ingredients and clearer labels.
Other grocery retailers have built a cult following because of their private label brands. This includes Publix for its organic and natural Greenwise line and premium ice cream Private Selections, as well as Kroger’s premium Private Selections brand and Simple Truth line, which is free of 101 components of concern. Aldi's private label products continue to win with shoppers, and Trader Joe's has long had a loyal following for its interesting store brand offerings.
The sleek packaging, higher quality, lower prices and better-for-you products are keeping consumers latched on to private label brands — particularly millennials. This trend-focused generation also cares more about the environment and their budgets, and appreciate the nicely designed packaging that store brands offer. Tie all of that in with their fickle brand loyalty, and retailers have their target private label consumer.
Grocers continue to find new ways to keep their products in the limelight, especially as mass retailers Walmart, Amazon and Costco also build strong private label offerings. Kroger, for example, launched an interactive concept called Treasure EmporiYum, which showcases hidden gems from its 100,000 SKU Our Brands portfolio.
