Less than a year after its launch, Smart Way’s household penetration grew 4.5 percentage points year-over-year in Q2, per new findings from Numerator.
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Less than a year after its launch, Kroger’s budget-priced line Smart Way was the fastest-growing private label brand in the second quarter, according to a new report from Numerator.
Kroger announced Smart Way last September at the same time the grocer said that it restructured its opening price point strategy in private label, narrowing its 17 brands down to two.
Smart Way’s household penetration grew 4.5 percentage points year-over-year in Q2, Numerator found. While it’s unclear how much of that growth is due to the brand being new, Numerator’s findings indicate that consumers are connecting with value-focused store brands with lower prices, with Amazon Basics and Aldi-brand items as the second and third fastest-growing private brands for Q2, behind Smart Way.
Kroger CEO Rodney McMullen told investors on Dec. 1 that 2 million households had already bought Smart Way products: “These products are meeting the needs of our customers on a budget.” In June, Kroger CFO Gary Millerchip told investors that Smart Way has enhanced the grocer’s “overall brand architecture.”
Kroger’s strategy to focus on budget-friendly private labels — Smart Way and Heritage Farms, its budget store line for fresh and dairy items — could be helping compete with mass retailers and discounters. While Walmart and Costco remain the private-label leaders across Numerator’s tracked retailers in the omnichannel and brick-and-mortar channels, Kroger has the second-highest share behind Walmart in the e-commerce channel, per the Numerator report.
Walmart brands still remain the most popular. In an analysis of the top 15 brands by household penetration in Q2, Walmart dominated the top five spots with Great Value (72%), Equate (53.1%), Marketside (46.8%), Freshness Guaranteed (41.4%) and Walmart (32.7%), per Numerator. Dollar Tree came in at sixth place, followed by Costco’s Kirkland Signature brand and Kroger’s namesake brand in seventh and eighth place, respectively.
As grocers look to appeal to consumers interested in store brands as lower-priced alternatives to name brands, quality and meeting consumer expectations remain key components. Wegmans recently decided to discontinue its store-brand sodas because the products contain aspartame and high fructose corn syrup — “two artificial ingredients that do not meet our Food You Feel Good About requirements,” a spokesperson for the grocer confirmed in an email to Grocery Dive.
