Having worked on a private label-focused trade publication in my previous work life, I’ve always harbored a soft spot for store brands. It warms my heart when I see consumers are increasingly turning to house brands as their preferred products.1 https://www.foodnavigator-usa.com/Article/2019/04/11/Consumers-don-t-just-like-private-label-they-prefer-it I cheer when I see that private label products are making national brands shake in their proverbial boots.2 https://consumergoods.com/private-label-growing-cpg-crisis (Not that I don’t love you, national brands. I love all brands, national or private! But I also appreciate healthy competition.)

And shaking those national brands are. In a presentation at the 2019 PLMA show in Chicago, Wall Street analyst Ali Dibadj spoke on “How Retailers are Building Billion Dollar Brands,” noting that retailers are taking control of CPG these days, and putting their own brands forward in part because national brands aren’t innovating. He also pointed to research showing listless sales from Procter and Gamble and PepsiCo, and retailers are finding better new products from challenger and store brands, instead of national partners.3 https://storebrands.com/wall-street-analyst-details-retailer-cpg-battle-ahead

With all this growth and opportunity swirling around private label, I have to say that it really irks me when I see headlines and news articles about how private label products are “making a comeback.”

Private label isn’t making a comeback. It never left.

I’ll be there for you

Private label products have been around since the dawn of the grocery age, and while their popularity has ebbed and flowed, they’ve been a constant staple on retailers’ shelves. Private label products haven’t actually gone anywhere, we’re just in a time space where thanks to several contributing outside factors (eg, the economy, increased quality, retail brand marketing) retailers are reacting accordingly.

Target, for example, plans on launching 2,000 new private label products over the next year under its “Good & Gather” label, which will become the flagship brand in its grocery aisles.4 https://www.forbes.com/sites/andriacheng/2019/08/20/why-targets-making-its-biggest-private-label-bet-on-grocery/#6f74f976252b

According to Nielsen data, private label products accounted for 57 percent of annual CPG sales at value grocery stores. At premium grocery stores, like Whole Foods or Sprouts, for example, private label accounted for 23 percent of CPG sales. 5 https://www.emarketer.com/content/retailers-are-revamping-private-label-grocery That may seem like a bad thing, but it’s actually great news for private label, as the year before these products accounted for only 11 percent of CPG sales. Double the sales in a year? Certainly nothing to sniff at. 

And retailers are eager to capitalize on this new! and improved! consumer interest in private label. Target, for example, plans on launching 2,000 new private label products over the next year under its “Good & Gather” label, which will become the flagship brand in its grocery aisles.6 https://www.forbes.com/sites/andriacheng/2019/08/20/why-targets-making-its-biggest-private-label-bet-on-grocery/#6f74f976252b

Natural Grocers recently launched a new line of pantry staples under its own brand, and Raley’s did a relaunch of its entire private label program.7 https://www.fooddive.com/news/shoppers-want-more-premium-private-label-products-report-says/552652/

Retail giant Walmart launched a private label skincare line, Earth to Skin, “hitching its wagon to the clean beauty movement with this line, touting no parabens, phthalates, petrolatum, mineral oil, sulfates, gluten or animal testing.”8 https://www.retaildive.com/news/walmart-launches-private-label-skincare-line/561679/

And these are just a few examples of retailers pumping up their private label programs lately.

So why are retailers putting such a heavy focus on private label these days? Why wouldn’t they? Is a better question. But since you asked, here are four reasons:

1. Private label is what consumers want. “Grocery items are a high-stakes battleground in which Target rivals including Walmart and Amazon are trying to drive consumers to stores or online,” writes Andria Cheng in the Forbes article. And Target CEO Brian Cornell noted that “reliable everyday traffic generated by its food, beverage and essential categories” are key performance drivers.9 https://www.forbes.com/sites/andriacheng/2019/08/20/why-targets-making-its-biggest-private-label-bet-on-grocery/#6f74f976252b

2. Not only do consumers want private label, they want premium private label products. A Daymon report shows that “20% of sales growth in private brands comes from products that are branded premium, trendy, or organic.”10 https://www.fooddive.com/news/shoppers-want-more-premium-private-label-products-report-says/552652/ And a good chunk of consumers (41%) want more private label products that are “better-for-you” and 44% want products with unique attributes.11 https://www.fooddive.com/news/shoppers-want-more-premium-private-label-products-report-says/552652/

3. When there are entire stores devoted primarily to private label, you can’t slack on your own-brand game. If you look at the devotion and fervor people feel for Trader Joe’s and Aldi—two stores that are stocked almost entirely their own labels—it’s easy to see how retailers can benefit when they invest in their private label programs. And to add a little more private-label-only brick and mortar competition, now Brandless is getting into the mix.12 https://www.forbes.com/sites/bizcarson/2019/07/31/brandless-cbd-retail-store-john-rittenhouse-new-ceo/#5c6c3b347801

4. With the growth of ecommerce, retailers can better control what consumers see—so why not show them their private label? As Dibadj noted in his presentation, controlling the e-commerce channel gives them the power to control the “stream space,” and research has shown that consumers most often buy products that appear on the first page online. What’s more, as an increased number of consumers purchase online (and purchase private label online), retailers “eventually own the shopper’s shopping list, where the retailer will store and manage that consumer’s purchases.”13 https://storebrands.com/wall-street-analyst-details-retailer-cpg-battle-ahead

So no, private label isn’t “making a comeback.” It’s just been working out, lifting weights, and getting in shape to rumble with national brands in the heavyweight ring. And it’s a match I’m eager to cheer on.

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