Over the last few years, store-owned private label brands are experiencing steady growth and gain in traction within the CPG space. In fact, retailers like Kroger, Sprouts, and Target are placing more importance on private-label brands due to high gains in revenue and profits. This shift is mainly due to the fact that private label lines are resonating more and more with consumers, especially during times of high inflation. Customers are seeking more value from the products they purchase – a bigger bang for their buck. As such, brands must expand their private label products to get ahead of the curve and stay on top of the competition.
How Big Brands are Taking Advantage of Private Label
Kroger is the largest supermarket operator in the USA and is at the forefront of the private label product movement. In 2021, its private label products produced $28 billion of its $140 billion in total sales, demonstrating the massive potential of the private label market. Kroger even spent $2.5 million on an advertisement during the 2023 AFC Championship Game that emphasized its own private-label products. “Our Brands’ quality and value proposition [are] especially important when inflation is affecting so many of our customers’ lives,” says Rodney McMullen, CEO of Kroger. In fact, Kroger’s private label sales reached an impressive 10.1% for Q4.
Sprouts is a supermarket chain known to offer a wide assortment of natural and organic foods, with its own line of private-label products. Last year, Sprouts hit $1 billion in private label sales. According to its CEO, Jack Sinclair, the company’s focus on innovation was the driving force behind reaching this milestone. Sprouts plans to accelerate growth by expanding its private label offerings with unique, seasonal, high-quality products that differentiate itself from its competition.
As one of the biggest retail corporations in the USA, Target sells everything from groceries to clothing, houseware, and electronics. Over the last few years, Target has launched multiple private-label lines and products, including Good & Gather and All in Motion. Each of these brands has generated more than $1 billion in sales. According to Christina Hennington, Target’s Executive VP and Chief Growth Officer, “Our owned brands have long been a source of pride and differentiation… offering great style and quality all at an incredible value.” This, combined with its launch plans of new and extended products, is the reason why Target’s private label lines continue to outpace its competitors in the marketplace.
How Other Retailers Are Tackling Private Labels
Many other retailers are following this trend in private label branding, creating a ripple effect across the entire CPG retail industry. Dollar Tree has been a renowned chain of discount variety stores in the USA and Canada throughout the years. In its efforts to expand its private label lines and products, the brand plans to introduce hundreds of national brand equivalents to its private label portfolio. According to Rick Dreilling, Dollar Store’s CEO, these plans are going to be put into action within the next year. Similarly, Grocery Outlet, a discount supermarket chain, is looking to grow its private brand selection alongside its broader SKU expansion to better capture more capital in the market.
As the CPG space evolves, entrepreneurs and business owners must adjust their strategies accordingly to stay relevant within the industry. Today’s retail landscape shows that consumers are on the hunt for value. Store brands realize it and are meeting the demand eagerly. In order to stay competitive and seize consumer attention, it is important for brands to offer an assortment of high-quality, value-driven products continuously. Not only that but brands must seize the opportunity to collaborate with retailers on innovative private-label products to cater to their consumer preferences.
Businesses that are able to successfully innovate and supply customers with high-quality, private-label products will be able to capture market share and stay on top of the fray. By partnering with YouBar, businesses can create specialized, innovative products and formulations that will stand out in the market. Contact YouBar today to get started on creating your next successful custom private-label product.