Private Label Gains Ground in Mass Channel and Online

By Jack Grant

Private label goods continue to post gains in retail channels as more consumers come to realize the quality of a wide variety of products. For example, store brands are becoming reliable weapon for mass merchandisers, club stores and dollar stores as they compete against both Amazon and other brick-and-mortar retailers.

The growth in mass retail has private label outpacing national brands in both dollars and units across all channels combined. The latest Nielsen data reveals that store brand dollar volume in the mass retail channel surged +41% over the last five years, compared to a gain of only +7.4% for national brands.

Meanwhile, private label has emerged as the new challenger brand in e-commerce, according to Nielsen. From aluminum foil to disposable diapers, private-label options are generating a significant portion of the overall e-commerce sales within certain categories. Nielsen’s research has found that CPG private label accounts for 3% of online dollar sales, up from 1.3% two years ago.

These impressive gains in the marketplace are sure to be a topic of discussion among trading partners when the Private Label Manufactures Association (PLMA) stages its annual exhibition Nov. 17-19 in Chicago.

“What is really amazing is how good retailers have become in spotting trends and developing new products,” said PLMA president Brian Sharoff. “Ten years ago, all you heard were complaints from national brands about how private Label was nothing more than copy-cats. Now it is the retailers and their store brands suppliers who are pioneering and leading the way.”

In fact, the sales statistics back up such a bold statement. Nielsen data shows that store brands volume climbed by +33.2%, while the national brands inched ahead by less than +1%.

The gains in dollar and unit sales are generating significant market share increases for retailer brands in the mass channel as a result. Unit market share climbed to 23.2% in 2018, up from 18.5% in 2013. Meanwhile dollar market share advanced to 19.3% in 2018, up from 15.5% in 2013.

Moreover, this impressive growth for private label shows no sign of slowing. In 2018, private label dollar sales advanced +9.8% and unit volume gained +10.6%. In contrast, national brands were flat in dollar volume and gave up -1.3% in units. This success of store brands is especially significant since the mass channel is growing faster than traditional supermarkets. Over the past five years dollar volume for the mass channel has climbed +12.6%, while unit volume was up +6.4%. Total sales in the mass channel reached $314 billion vs. $330 billion in supermarkets.

Gone are the days when supermarkets offered only commodity products that imitated national brands. Grocery retailers across the country are turning to innovative store brands products to attract loyal shoppers as competition heats up between brick and mortar and online retailers.

                                                                           September 2019
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