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Private Label Brands Have Their Moment

Denis Storey
September 4, 2020

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On-Demand Webinar: Retail Supply Chain Survival Tips During COVID-19

While demand for food remains high, retailers and brand owners must prepare for an uncertain future. Watch our on-demand webinar for tips on what retailers and store brand owners can do to navigate the COVID-19 threat and emerge stronger.

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Before the pandemic upended economies around the world, private label brands had already arrived. A 2019 IRI Consumer Connect Survey found that “private brand dollar sales grew 3.8% in 2019, twice the rate of national brands.”

That growth has convinced big retailers such as Kroger and Target to double down on expanding and promoting store brand products. According to Numerator, a Chicago market research firm, in less than a year since its launch, Target's Good & Gather private label brand has found its way into 13% of American households.

"While shoppers across generations and income groups are undoubtedly more price-conscious, they're turning to private labels because of their positive perceptions of the value," IRI vice president of content and thought leadership Joan Driggs said in a release announcing the survey results. "Shoppers are buying private brands because it makes them feel good to save money without sacrificing taste, selection, or quality. The improved consumer perception of private label value has a growing influence on store choice, with many leading retailers offering premium private label selections."

Private Label Products Outperform National Brands

As consumers rush to grocery stores, private label brands continue to outperform national brands, posting double-digit sales growth during the pandemic.

High Growth Private Label Brands 2019Nielsen reports that first-quarter dollar sales of private label products across all retail outlets climbed nearly 15% during the first quarter of 2019, increasing $4.9 billion year over year. Total dollar sales for store brands in the first quarter were a whopping $38.4 billion, with 13.2 billion units sold.

According to Nielsen's data, during the first quarter of 2020, private labels gained about a third more in both dollar and unit sales than national brands.

Across all U.S. retail outlets, store brands grew 14.6% in dollar volume and 12.8% in unit volume, compared to gains of 11.5% in dollars and 9.2% in units for national brands.
Among the retail channels, Nielsen reports that store brands' most robust gains occurred in the mass market, including mass merchandisers, clubs, and dollar stores. Store brands gained 16.6% in dollar sales and 16.5% in unit sales compared to the same quarter in 2019. That expansion surpassed national brands, which advanced 10.1% in dollars and 7.3% in units.

“There’s no doubt that shopper behavior was highly influenced by consumer fears,” PLMA President Brian Sharoff said of the Nielsen research. “Nonetheless, the statistics point to greater acceptance of retailer brands as the coronavirus crisis evolves.”

While the future looks bright for private label brands, obstacles remain, especially as the supply chain continues to buckle under the added strain, it's been under for months. After all, even the most optimistic experts predict an economic downturn following such a historic number of Americans filing for unemployment.

We recently hosted a webinar that outlined supply chain survival tips for retailers, check it out here