Before a 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 major retailers like Kroger and Target to double down in expanding and pushing their own private brand products. In less than year since its launch, Target’s Good & Gather private label brand has found its way into 13% of American households, according to Numerator, a Chicago market research firm.
“While shoppers across generations and income groups in 2019 are undoubtedly more price conscious, they’re turning to private label 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 is having a growing influence on store choice, with many leading retailers offering premium private label selections.”
As consumers rush to grocery stores, private label brands continue to outperform national brands, posting double-digit sales growth during the first days and weeks of the pandemic.
Nielsen reports that first quarter dollar sales of private label products across all retail outlets climbed nearly 15% during the first quarter of 2019, up $4.9 billion over the year before. Total dollar sales of store brands in the first quarter were $38.4 billion with 13.2 billion units sold.
Over the first quarter of 2020, private labels gained about a third more in both dollar and unit sales than national brands, according to Nielsen’s data. In 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, store brands strongest gains occurred in the mass market, including mass merchandisers, club, 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 while the supply chain continues to buckle under the added strain it’s been under for months. And, after all, even the most optimistic experts predict an economic downturn following such an historic number of Americans filing for unemployment.
We hosted a special webinar, “Grocery and Private Label Retail Supply Chain Tips” in early May 2020. Access the recording now here.