Private label is eating national brands for lunch

-Although Amazon has received much of the online private-label hype of late, Walmart’s brands sold nearly double the amount of products that Amazon’s brands did over the past year.

– Private-label apparel is growing as quickly as CPG products online.

-Private-label brands are creating a bigger divide between retailers and their suppliers. While just 5% of online sales comes from private-labels, they are growing at 65% year over year.

Within the past year, sales of private-label brands have surpassed those of manufacturers’ brands, according to a Nielsen report cited by Food Navigator.  A report by Daymon, a global consumer retail and private brand agency, found that 81 percent of consumers buy private label products every time or almost every time they visit the grocery store.  The report also highlighted that 85 percent of consumers trust private brands as much as national brands and that private label product sales increased by four percent in 2017, which is eight times higher than national brands.

This trend is partially due to consumer perceptions of private brands being a better deal, and cheaper than national ones. With value retailers diversifying their private label products to appeal to consumer trends, this segment is expected to dominate the grocery landscape.

According to survey results, [inlinetweet prefix=”” tweeter=”” suffix=””]74 percent of consumers believe private label products have more value for their money[/inlinetweet]; 61 percent say the quality of such products have improved; 59 percent say private brands offer more variety; and about 53 percent shop at stores specifically for private label products. Discount stores that offer these national brand counterparts are expected to outgrow traditional grocers with an estimated CAGR of 5.8 percent between 2017-2022.

With Private Brands, there’s the notion that you’re getting a deal or at least not paying a nonsensical premium for the name on the packaging and that’s why these brands are growing so much. It’s just natural selection at work.

Amazon has expanded their private label products in the OTC category and Target is even selling private label wine while Costco is selling private label wine and beer.

Why?

Consumers understand that private label products save them money and are often a better value.  It’s also a failure of some national brands to really offer consumers a good reason to purchase their products.  Line extensions and new logo’s don’t resonate with consumers who are smart enough to understand that some national brands are not worth a 25%+ price premium.

Private label is eating national brands for lunch