The retail industry is witnessing a paradigm shift, with
private label products becoming a formidable force. Recent data underscores
this trend, revealing a substantial surge in store brand market share.
According to Circana sales data, store brands achieved unprecedented highs in
both unit and dollar share during the first six months of 2024, compared to the
same period last year. As of June 16, unit market share stood at 22.9%, and
dollar market share at 20.4%. Steven Johnson Grocerant Guru® at Tacoma, WA
based Foodservice Solutions® believes
that at its core private label is clearly ascending fresh prepared food to levels
not even dreamed about five years ago.
The Surge of Store Brands
PLMA President Peggy
Davies aptly described this as the “store brands phenomenon,” which
is transforming the retail landscape across all channels, departments, and
categories. The superior performance of store brands at checkout, compared to
national brands, is a significant contributor to this trend. Store brand dollar
sales increased by 2.3%, outpacing the 1.1% gain of national brands. The
disparity in unit sales growth was even more pronounced, with store brands
rising by 2.5% while national brands declined by 0.8%.
The New Power Paradigm: Facts and
Figures
The success of private label products is not just a
fleeting trend but a robust business model power paradigm. The total store
brand sales for the first half of 2024 reached an impressive $121 billion,
compared to $472 billion for national brands. The outlook for the rest of the
year is optimistic, with PLMA projecting that total store brand revenue for
2024 will exceed $250 billion, setting a new record for annual sales.
Keith Lincoln and Lars Thomassen, in
their seminal work, have long advocated for the potential of private
labels. They emphasize that private labels offer retailers higher margins,
stronger brand loyalty, and greater control over the supply chain. These
advantages have become increasingly evident as more consumers turn to store
brands for their perceived value and quality.
Category Performance: A Broad Spectrum
of Success
Circana’s data reveals that store brand sales are
flourishing across nearly all product departments. Here’s a snapshot of the
categories that have seen significant gains over the 52 weeks ending June 16:
·
Beauty: +10%
·
Liquor: +8.8%
·
General Food: +6.9%
·
Home Care: +6.8%
·
Pet Care: +5.8%
·
Beverages: +4.3%
·
Frozen: +2.9%
·
General Merchandise: +2.2%
·
Home: +1.7%
The only exception was the refrigerated category, which
experienced a slight decline of -0.7%.
The Strategic Advantage of Private
Labels
Private labels have become a strategic asset for retailers.
By offering products that compete directly with national brands in quality and
price, retailers can attract a loyal customer base and differentiate themselves
in a crowded market. This is particularly crucial as consumer behavior shifts
towards seeking value without compromising quality.
The rise of private labels is also driven by innovation and
responsiveness to consumer trends. Retailers are investing in product
development, packaging, and marketing to elevate their store brands. This
investment is paying off as store brands now represent a viable alternative to
national brands, appealing to a broad demographic spectrum.
Looking Ahead
The trajectory of private labels suggests they are not just
a trend but a fundamental shift in the retail business model. As Lars Thomassen
and Keith Lincoln highlight, the potential for growth in private labels is
immense, driven by the benefits they offer to both retailers and consumers.
With the continued focus on quality, value, and innovation,
private labels are poised to reshape the retail landscape. As we look forward
to the rest of 2024 and beyond, it is clear that private labels are setting the
pace, and their dominance is likely to grow.
The Grocerant Guru® perspective is clear: the rise of
private labels marks a new power paradigm in the retail industry. Retailers who
embrace and invest in their store brands are not just keeping up with the
trend; they are setting the stage for future success. The data is compelling,
the benefits are clear, and the future of private labels looks brighter than
ever.
Don’t over reach. Are
you ready for some fresh ideations? Do your food marketing ideations look more
like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while
creating a platform for consumer convenient meal participation, differentiation
and individualization? Email us
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