Private Labels are Winning the Brand Wars

December 11, 2017

The days of no-frills packaging intended only for those on a tight budget are no more. Investing in private labels has become a focal strategy for independent grocers looking to differentiate themselves from competition, one that research has shown to greatly improve the consumers’ shopping experience. In fact, nearly one in every five items sold in U.S. supermarkets was a store brand, Nielsen estimates.

While private labels became more popular during the Great Recession, the trend continues to grow. Despite 55 percent of U.S. shoppers claiming their household financial health is good, nearly half of all shoppers are still looking for deals to make ends meet, according to the latest IRI Consumer Connect survey. There’s a good reason too—consumers save $30 billion each year by choosing store brands.

This remains true when consumers select which retailers to patronize, with 95 percent of shoppers prioritizing low price points and 82 percent saying a store’s selection of private labels was important. 75 percent of shoppers also viewed them as “just as good” as the national competitors.

Private label sales even reached an all-time high of $118.4 billion in 2015, cornering a record 17.7 percent of the total market, according to the Private Label Manufacturers Association’s 2016 Private Label Yearbook.

Shoppers have taken notice of this shift and are responding positively, according to Nielsen research:

  • Almost three-quarters of consumers (71 percent) say private-label quality has improved over time.
  • 69 percent of respondents feel it’s important to get the best price on a product and 70 percent say they purchase private label to save money.
  • Two-thirds (67 percent) believe private label offers extremely good value for money and 62 percent say buying private label makes them feel like a smart shopper.

Independent supermarket operators have seen great success in this space as well. Coborn’s, which operates 54 stores across 5 different states, recently committed to expanding their private label selection, and hired a director of private label and built an in-house team.

During the same year, Coborn’s launched a new private label brand called “Four Brothers” that honors the family’s history. The products in the line can be found across the meat, bakery, deli, and produce departments.

It’s just another example how private labels have developed well beyond the traditional staples, such as milk and canned peas, to include health and beauty aids, paper products such as diapers, and soft drinks. The most important characteristics, however, are that they be an inexpensive, easy, low-risk purchase that consumers can easily make side-by-side comparisons of national brands.

Luckily, one of the biggest traits that set independent grocers apart from national chains is their ability to experiment and tailor food options to the communities they serve. As private labels continue to grow in popularity, independent supermarkets should continue to expand store brand products to better fulfill consumer needs across a variety of price points.