The Growth of Private Label

Sales of private label offerings are expected to grow this year. In the article ‘Private Label Offerings Predicted to Grow This Year,’ NACS writes:

Although private label accounts for only 4% of grocery e-commerce sales, that number has quadrupled during the past two years, pointing to an opportunity for retailers to capitalize on changing habits.

According to NielsenIQ, 2020 was the first year in the last 10 where national brands outpaced private labels in growth. However, they report that 80% of customers say they are restructuring spending habits toward value products without sacrificing quality.

Kerry, a global supplier of food and beverage ingredients, noted consumers seek pricing, safety and variety when they shop, citing a proprietary survey of 1,500 private-label consumers. The firm divided store brand consumers into two groups: “practical traditionalists” and “adventure seekers.” Adventure seekers are less price-sensitive, more experimental and gravitate toward emerging categories, such as plant-based foods, while practical traditionalists focus on price, mainstream categories and convenience.

(image source: 7-eleven.com)

Beyond providing customers with a great value, going private can appeal to customers that want new, local, or exclusive products. Shoppers of an independent store may be more likely to pick up store branded merchandise with the understanding that more of the margin goes in the pocket of a local small business. They also appeal to those shoppers that are always on the lookout for something new or exclusive to try.

Sourcing high-quality products is hugely important when going private. You don’t have to invest in product development, but you do need to source from reputable, proven manufacturers. Most store brands span multiple categories (candy, nuts, chips, meat snacks, deli, food service, and more). Once a customer tries and likes one of your offerings, they are more likely to trust your brand in other categories, even ones where they already have brand loyalty. On the flip side, one bad product can keep customers from exploring any of your other private label products. If you capture brand loyalty and traction, those customers must return to your establishment to purchase more!

Like anything you stock, the branding and appearance can draw in or turn off potential buyers. You need to let shoppers know about your new products. Pump and window advertisements, website and social presence, and more are all important to spreading the word. Because you own the brand, you have complete control over the marketing and branding direction you choose.

(image source: caseys.com)

Do you have multiple location, great name recognition, and a ton of loyal customers? That is a great start, and with this kind of foundation it can be easy to start planning for many products. However, if you have 1-2 stores, it is best to start slowly and wade in. Having a multi-step plan of execution, starting with a flagship product line is best. Maybe it’s a food service line (burritos, pizza, sandwiches…), trail mixes, or candies. Do you see something your customers want that your store is missing? Is there a product range that you think could do well, but the national brands just seem to be too expensive? This is the perfect jumping off point.

Whatever your starting point, having a trusted partner in selecting manufacturers and creating your branding is the first step to getting started in the growing private label arena. From sourcing to merchandising, we are your private label partners.

Contact us for a consultation today!