Over the last few decades, private labels have continued to grow steadily in popularity.
Store brands aren’t a new idea; they’ve been around for a long time, and Centric Software can help you capitalise.
From A&P’s launch of Eight O’clock Coffee in the early 1900s to Loblaws’ famous bright yellow ‘no name’ boxes in the 1970s, and now modern retailers like Aldi and Trader Joe’s, where most products are private labels, store brands have steadily risen in popularity.
Record-breaking numbers
The 2024 PLMA Private Label Report confirms this trend with data, showing a YOY record-setting 4.7 percent increase in private label dollar sales compared to a 3.6 percent rise for national brands.
The primary force behind private labels is economic, as indicated by a PYMNTS Intelligence survey of over 1,700 US consumers where 86 per cent of grocery shoppers have altered their purchasing habits due to inflation.
Meanwhile, total store brand dollar sales during 2023 moved ahead to $236.3 billion, an increase of $10.1 billion from the previous year and setting another record, surpassing the former high mark that was set last year
Research firm Numerator also revealed that private label products are capturing a substantial share of leading retailer sales, ranging from a peak of 80 per cent at Aldi, 69 per cent at Trader Joe’s, 33 per cent at Sam’s Club and H-E-B, 29 per cent at Dollar Tree, 27 percent at Kroger, 24 per cent at 7-Eleven, to 23 per cent at Target. And the list continues beyond this.
Leaning into private label
Want to join the private label trend? Consider a modern, flexible Product Lifecycle Management (PLM) solution to boost and refine your store-brand options for cost-conscious shoppers.
Centric PLM centralises product information and streamlines product development processes.
Retailers can quickly adapt to economic changes and the demand for affordable, high-quality products.
This streamlined approach is key to staying competitive with national brands on pricing.
Meanwhile, consumer habits are shifting as well. Since the COVID-19 product shortages, people have learned to take what they can get if the national brand is unavailable.
Now that those shortages are mostly in the rear-view mirror, consumers have not reversed course to fully go back to national brands.
The quality perception of store brands is up; price is no longer the only reason for shoppers to turn to
private labels.
The main draw
A 2024 FMI report reveals that more than half of consumers now choose specific stores due to private-label products. This marks a rise from 2016 when only a third of shoppers selected stores based on brand offerings.
Beyond cost, still the primary driver for buying store brands, quality and value is increasingly important.
Retailers are approaching private label lines as if they are manufacturers because that’s effectively what they’ve become.
They handle all product development stages, including marketing, research and development, ingredient sourcing, regulatory compliance, labelling, and packaging, in-house.
This is where having real-time visibility into every supply chain step and tools for better supplier collaboration become crucial.
With PLM, retailers can now ensure consistent quality, which is essential for building customer loyalty and attracting new shoppers.
Modern PLM enables quick response
Grocery retailers’ advantage over national brands is that they have consumer databases and can react quickly to create products people want.
Food trends like organic, gluten-free, and plant-based items can be developed and slotted into a company’s private label lines while controlling exact product characteristics, introduction-timing and coordination with shelving and marketing strategies for the
product launch.
Meanwhile ‘healthy’ product attributes within a unified store-brand line address consumer needs effectively.
Centric PLM manages complex product portfolios effortlessly, providing retailers with tools to innovate and adjust its private label offerings to align with consumer preferences.
The company also simplifies tracking of government regulations (FDA, USDA, EU, FSANZ) and ingredient certifications such as kosher, halal, and vegan when all are housed in one
digital repository.
Sustainability
Consumers are increasingly aware of sustainability and make choices based on it. According to an NIQ report, 69 per cent of consumers feel that sustainability matters more now than two years ago.
They seek assurance that the ingredients in their food are sourced without harmful environmental practices.
Meanwhile, legislation also plays a role: in the EU, Environmental Social Governance (ESG) reporting is mandated for companies that meet certain criteria, such as size and being listed on EU-regulated markets.
In terms of consumer perception, packaging is the most visible factor—less plastic is preferred, and recyclability is important if plastic must be used.
With Centric PLM, grocery retailers can incorporate sustainable practices into product design, manage ingredient sourcing, ingredient certifications as well as sustainability metrics.
Centric is set up to track the percentage of recycled materials in a package to make sure it meets eco-requirements.
The future of private labels is bright
Recently released figures from Circana (the merged IRI and NPD firm) indicate that private label sales could surpass $250 billion in 2024.
Currently, private label accounts for about 22 cents on the dollar of
grocery spend.
It is not disappearing. As companies advance into higher-end private label products and expand current store-brand lines, the private label market share is set to grow.
With Centric Software solutions, flexibility and configurability support adapting to future retail trends, such as the demand for more personalised customer experiences, for instance.
The software’s scalability guarantees that retailers can consistently innovate and remain ahead of the competition as consumer demands change.
Centric Software solutions enable grocery retailers to adeptly manage their private label products, tackling economic pressures, evolving consumer preferences, and the demand for high-quality, sustainable items.
This positions Centric as a crucial partner in advancing the success of private labels in today’s competitive grocery market.
To learn more, down the F&B Rise to the Sustainability Challenge eBook on the Centric Software website.