The Store-Brand Revolution Is Here—and It’s Bigger Than Inflation

For decades, private-label brands held a dreary spot in U.S. shopping aisles. They were the items consumers purchased only when forced: generic boxes, low prices, and doubts about quality. Not anymore. Consumers nationwide are buying private-label products from Walmart’s Bettergoods to Target’s Good & Gather to ALDI’s expansive lineup of proprietary brands. After kicking off as a necessity due to inflation, private-label shopping is evolving into a significant trend: a paradigm shift in American shoppers’ attitudes toward value, quality and brand affinity. The trend is reflected in the numbers. NielsenIQ data, reported by Reuters, showed that retailer sales at value-focused stores rose 11.6% year-over-year from January to May. Traditional grocers saw sales increase by 2.3%.

This is not just a tale of cash-strapped consumers trading down to store brands. Shoppers of all income levels are purchasing store brands. Upscale consumers are even starting to wonder if that well-known logo is worth the extra money when the store’s own brand is similar in quality at a fraction of the price. “Smart shopping” has transformed from a class divider into a mentality.

From Generic Substitute to Destination Brand

Grocery stores have been working on their store-brand offerings for years. Improved recipes. Sleeker packaging. Expanded organic, global, and premium offerings have helped store brands overcome the stigma once associated with generic products.

Now the largest chains are doubling down on those efforts. Walmart is expanding its Bettergoods food line to include nearly 1,000 items. The retailer says that brand has helped it draw new customers with higher incomes. Target will roll out 600 additional private-label food and drink products in the next two years. That includes 400 products under its top-tier Good & Gather brand. Kroger says sales of its private brands are outpacing the national brands it sells. Dollar General is stocking more store-brand items aimed at budget-conscious families.

Then there is Aldi, whose business model is built around exclusive brands. With approximately 2,700 U.S. locations, the German-owned chain plans to open another 180 stores this year and 400 more through 2028.

Aldi is betting that the appetite for value will survive even if inflation moderates—and it is probably right.

Why Retailers Love Their Own Brands

Private labels give retailers more than just a vehicle for advertising low prices. They allow stores to have more control over everything from product development to packaging and pricing. Private labels also tend to create better margins than nationally recognized brands. But above all else, an exclusive product creates an incentive for customers to return.

Want some Cheerios or Coca-Cola? You can find those at just about any store. But if you have a taste for a certain Aldi preparation or can’t live without Costco’s Kirkland brand or Target’s Good & Gather products, you have only one place to shop. That makes groceries a loyalty driver. Many analysts now view private labels as part of retailers’ growth strategies.

They’re no longer just reacting to tough economic times by offering inexpensive brands. Today’s grocery stores want to be brand creators, not just distributors for big food and household goods companies.

The Middle Is Being Squeezed

This evolution also highlights a deepening split in how consumers spend. Both value retailers and premium retailers are winning market share from traditional middle-of-the-road competitors. Americans aren’t cutting back on spending, just becoming more deliberate with their dollars. Shoppers may clip coupons on dry goods, household items, and weekly groceries, then blow their budget on a vacation, dinner out, or a high-end product they truly love. This seesaw behavior puts generic brands and retailers in a precarious position. If you’re not easily classified as cheap or worth splurging on, you could lose your place on store shelves. Big-name consumer-goods companies are suddenly facing the same reality. Brands can’t automatically charge more for their products just because people know they exist—least of all after consumers find a cheaper brand that they like just as much.

Price may have attracted new shoppers to private labels, but quality is keeping them coming back.

When you snap your brand loyalty — realize you’ve been buying that triple-priced nonsense all these years — and you try a clone you like, you tend to stick with it. And that could make the onslaught of private labels less of a blip caused by inflation than a permanent shift in retailing: Customers are taking less pride in brands. Retailers are becoming product manufacturers. Value is determined by performance, not package.