Supply side: Retailers continue to push private brand sales.


Major retailers have long used private labels to create unique brands, and the average industry share for these brands was 18.2% by the end of 2022, according to the Food Industry Association (FMI) study. Retailers intend to increase the share to 22.6 percent.

David Orgel, who prepared the FMI report, said: “The driving force behind this strong growth outlook is higher consumer demand in the US economy in light of inflation and recession.”

FMI found that 93% of retailers surveyed say private label is very or extremely important to their business, and 83% plan to increase investments in private label in the next year. According to the survey, 69% of respondents saw the most improved opportunities in premium private brands. Also, 60% said they see the biggest share growth in “better for you” simple/pure ingredients and “gluten-free” dietary needs. More than half of respondents saw growth opportunities in better value foods as consumers chase lower prices.

Costco is a leader in personal brand loyalty. Kirkland’s signature products include non-food, grocery, general merchandise, bakery and adult beverages. For his hometown of Kirkland, Wash. , Costco has gained a cult following as a multi-billion dollar brand that typically sells for up to 20% of its national brand counterparts.

“Kirkland is a brand in itself. It’s one of the reasons people go to Costco. It’s not something you can say about a lot of private labels,” said Barclays retail analyst Karen Short.

Costco said it grew Kirkland’s signature market share by 1 percent between fiscal 2021 and the end of fiscal 2022 on Aug. 28. The company says Kirkland’s signature market was 28 percent last year.

The CEOs of Walmart and Kroger each said recently that consumers were choosing private brands over some national brands because of the value they offer at a time when households face costs amid persistent inflation.

“When the economy is tight, our products always gain share,” said Kroger CEO Rodney McMullen.

Kroger said it will continue to invest in private brands to fill the gaps that national brands need to acquire. McMullen said many national brands — Kraft Heinz, Mondalez, PepsiCo, Coca-Cola, Unilever and Hershey — plan to raise prices this year, and that’s more opportunity for private brands to increase their share among value-oriented consumers.

Discount Walmart has been seen as a winner in times of inflation because of its size and ability to last longer than smaller competitors. Walmart also has several private brands in the consumer goods category with annual sales of over $1 billion, such as Great Value, Markside and Equate.

In the year By the end of 2022, Numerator reports that Walmart will hold four of the top five private brands in the consumer goods sector. The great value brand was reportedly purchased by 72 percent of the U.S. population last year. Numerator reports that Target’s private label market share for grocery, family, health and beauty is 15.1%, Whole Foods Market 14.7%, and Publix 13.6%. Walmart’s market share in these categories is 60 percent.

Walmart US CEO John Furner said on a January earnings call that there is a shift away from national brands to private labels, particularly in deli, deli, bacon and dairy products, allowing the retailer to grow its share.

Sam’s Club says its focus on member-brand personal branding has been a game changer in recent years. Member markup represents 30 percent of total sales at Sam’s Club, equivalent to $22.08 billion. According to Sam’s Club CEO Kat McLay, it has also worked to make its members’ brand more attractive to consumers. He told the media at the retailer’s shareholder events in June that Member Mark’s brand is a “must have” for customers who aspire to be because they trust the quality and value.

Since 2017, Sam’s has grown its member brand value by more than 100%, and remains the preferred brand on The company’s management attributed the successful growth of member brands to creating a strong asset and loyalty foundation for the retailer’s entire business.

Procter & Gamble recently said it plans to fight more advertising about the quality of its brands in private label products. Walmart CEO Doug McMillon said the retailer is poised to allocate more space to private and third-party brands for families looking for lower prices. He said suppliers unwilling to help with lower prices could see less shelf space.

According to Carol Spiekerman, president of Spiekerman Retail, the relationship between national and private brands should not be adversarial, especially as private brand development is a side business for some national brands.

“Because most major retailers are a mix of national and private brands, national brands are used as complements to private brands, not as competitors. It’s not a zero-sum game,” she says. Idea is an irresistible and immutable combination of green.”

Investment doesn’t necessarily translate into expansion, she said, because a private brand program can take years to gain traction. For existing brands, she explains, continuous improvement can make sense in many cases, and occasionally portfolio cuts also make sense.

Editor’s Note: of Supply side section Talk Business and Politics focuses on companies, organizations, issues and individuals offering products and services to retailers. The supply side is managed and sponsored by Talk Business and Politics. Propack Logistics.


Source link

Leave a Reply

Your email address will not be published. Required fields are marked *