or those measuring the role private label
is playing in overall grocery sales, a look at
Kroger’s approach may serve as an ideal guide.
During the third quarter of 2017, the company’s private label products accounted for 28.2% of unit
sales and 25.6% of sales dollars (excluding fuel and pharmacy). Sales of its Simple Truth line—which launched in
2012 and now includes 1,400 products across multiple
categories—grew by an impressive 19%, and the company
has pledged to continue expanding the line in 2018.
Kroger’s private label push is just one example of
how retailers are upping their game with own brands in
response to consumers’ embrace of the category.
Nudging the Needle
Private label programs have been around for decades. But
as consumers’ attitudes have changed, so has the category’s performance.
Donald Stuart, managing partner for Cadent Consulting, says, “While industry experts have often predicted
a breakthrough for private label based on improved
quality, better marketing, European trends, large price
gaps and retailer consolidation, private label’s share has
barely budged in the U.S. over the decades.” However,
“We believe this time will be different,” adds Stuart, who
weighs in on some of the top trends impacting the private
label category today.
Boomers = Booming Opportunity
“Boomers are a large cohort, but traditionally they are
locked into age-old habits,” says Stuart, who believes
three factors will help “tilt the boomer population into a
booming opportunity for private label”:
1. The emphasis traditional retailers such as Costco,
Walmart and Kroger will place on private label and signature products as points of differentiation.
2. The growth of deep discounters such as Aldi, and
potentially Lidl. “These outlets have approximately a
90% private label share and are true behavioral change
agents,” Stuart says. “Boomers on fixed incomes will be
attracted to the savings.”
3. Voice ordering. “While boomers may not be the first
to adopt online ordering, Alexa and other personal digital
assistants can lower the barriers of technology and make
voice ordering and home delivery a reality for boomers
over the next decade,” Stuart says. “The Amazon algorithm is known to select Amazon’s Choice and private
label as a default.”
Takeaway: Stuart thinks Kroger’s Simple Truth, Wegmans’ W and Costco’s Kirkland Signature brands are the
ones to watch. “Marketing private label as a ‘true brand’
with an integrated message, packaging design and positioning can help create destinations with differentiation
for grocery retailers,” he says.
Millennials + Gen Z = Bright Future for Private Label
Members of these generations are known as “the brand
agnostics.” Studies show that 51% of millennials have no
real preference between private label or national brands,
compared to 39% of boomers. “If you ask a millennial
about a center store brand, the odds are reasonable that
the individual has never heard of it,” Stuart says.
Takeaway: To attract these brand agnostics, Stuart
says grocers should leverage what he calls “perimeter
power,” which will “ensure their store brand is prominently featured around the perimeter in the most innovative ways, from fresh meal kits to natural/organic refrigerated products.”
In Pursuit of Premium
Tiering has always been the traditional approach to pri-
Tracking top-line trends in store brands
Trends in the
Opportunity exists among all generations of consumers
to increase private label sales. By Kathleen Furore
Amount of millennials
who have no real
private label or
national brands, vs.
39% of baby boomers.
Kroger, Wegmans and
Costco are among the
leading retailers that excel
with signature brands.