Retailers are expanding store-brand offerings to nab deal-seeking shoppers
From store brand to couture brand… Private-label foods have come a long way from the days of knockoff Cheerios gathering dust on the bottom shelf. As shoppers look for deals in the face of higher food prices, retailers are stocking shelves with store-owned food and drink brands. Picture: Target’s Good & Gather and Costco’s Kirkland. They’re seeing results too. Private-label sales have eclipsed prepandemic #s, growing to 20.6% from 18.7% of total US grocery $$ spent.
Chompin’ on Baked Rays: At Casey’s (the convenience chain with 2.5K stores), private-label chips were a quarter of all chips sold this summer. Now Casey’s says it plans to add 45 private-label products to the 350 already on its shelves.
Going private: It’s not just snacks. Private-label varieties make up nearly half the cheese market and 38% of canned veggies.
Once copycat, now competition… Besides being cheaper, private-label brands are typically more profitable for retailers because they don’t have the marketing costs of brand names. And shoppers have responded: Costco’s Kirkland Signature brand pulled in $58B in 2021 (and even has its own merch). Walmart’s Great Value sales grew 9% between 2021 and 2023, and Wegmans has grown its store-brand biz to 17K+ products.
Brand loyalty only goes so far… As name brands hiked prices during the pandemic, shoppers started to look at store brands in a new light. Private-label sales grew 8% to $108B in the first half of this year, and 54% of shoppers said they’d continue to choose private labels. This summer, Kraft said that store brands haven’t followed its own recent price hikes, which has led to bigger price gaps. That could make name-brand price bumps tougher to push through.