(Photo: Flickr user Mark Mathosian)
Private labels are so much more than they used to be for food retailers, and it looks like they’re here to stay, according to a report from Planet Retail and Trace One. From Trader Joe’s and ALDI, which have built their businesses with a focus on private labels, and Kroger, whose Simple Truth and other private labels have grown to make up 25% of grocery sales for the retailer, according to the Cincinnati Enquirer, private labels are giving national brands a run for their money. And according to the Planet Retail report, grocers should take note.
After detailing some key trends that are prevalent among private label retailing in the U.S., like drugstores pushing food sales and the emphasis on value in the private label market, it identifies some key takeaways for retailers that have also appeared in SmartBrief’s coverage of the food retail industry.
We took a look at the report to highlight some of its conclusions that have appeared as common themes throughout our newsletters over the past few months:
A focus on health and wellness
“Health and wellness offers particular opportunity that supermarkets should make more of,” the report says. Some retailers are already acting on this advice, offering shoppers private label items that meet consumer demand for better-for-you products:
- Meal solutions, health benefits among trends in private label
- How Kroger has found a foothold in natural, organic market
- Report: Organic, natural private-label sales to keep growing
Growth among private label products is going strong
“Private labels are still well positioned for future growth in the U.S. An ongoing expectation from consumers on value and quality are key attributes that private label is positioned to fulfill,” according to the report. Retailers like ALDI and Trader Joe’s continue to expand in the U.S. as shoppers seek more stores where they can buy quality products for less, and traditional supermarkets are taking advantage of the opportunities in the private label market to grow sales:
- How Kroger’s private-label brands fuel growth
- Positive perception of private-label products is on the rise
- ALDI enters Lincoln, Neb., market
Taking the customer into account is key
“Retailers must support private label lines with consumer-centric and highly integrated marketing campaigns,” the report says. “The customer is key — tailor store brand offerings and use feedback to enhance product development.” Consumer wants and needs are always shifting. Retailers need to hone in on what shoppers are looking for to ensure success for private label products. It is also important for private label products to appeal to different demographics. For example, millennial shoppers are looking for different products than baby boomers, and shoppers in urban and rural areas have different needs:
- Single shoppers focus on price, opt for store brands
- Loblaw aims at Canada’s foodies with new marketing push
- How grocers can tap the $1.5T Hispanic market
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