Why Private-Label Brands Are Going Premium

Why Private-Label Brands Are Going Premium
Consumer Goods

Store brand innovation is re-shaping consumer connection with traditional name brands through enhanced packaging and healthier ingredients, tapping consumer desire for convenience and their trust in retailers

Plus Aziz
  • 28 november 2018

Private labels have been continuing to experience substantial grown since the 2008 economic recession. According to Nielsen via The Private Label Trade Show, “The channel has grown in recent years to almost equal the traditional supermarket channel as the place where most buy their groceries. Total sales of all products last year were $305 billion in the mass channel vs. $324 billion in supermarkets.”

Shoppers are spending differently and retailers are investing in new revenue streams to differentiate themselves and make better margins. Nielsen also notes that the growth of private label is typically associated with economic hardship; but rather than consumers reverting to pre-recession purchasing patterns, they are now interested in new ways of engaging with brands, and consumers are willing to pay greater premiums on products with perceived differentiation.

The Premiumization of Private-Label Brands

One key component that has enabled private labels to compete so fiercely with age-old brands is the fact that they can provide premium brands at a cheaper price point, but this is far from being the only reason consumers flock to such brands, according to Retail Analyst Pamela Danziger, who calls attention to other elements of the shopping experience. “It isn’t only, or even mostly, because of cheaper prices that consumers are flocking to private label and generic options. It is because retailers that offer high-quality store brand products have helped take the decision-making out of the purchase equation,” Danziger tells PSFK.

Experts are noting how private-label brands are now working to position themselves as a premium alternative to better-known brands. Attendees of The Idea Supermarket at The 2018 Private Label Trade Show got a sneak peek at some of the latest private label products about to enter supermarkets. It featured an extensive list of brand refresh projects including Kroger’s Simple Truth organic brand, new seasonal products from Whole Foods 365, Aldi’s Earth Grown brand and imported foods from Wakefern’s new ShopRite Trading Company.

All this considered, the premium-ization of private-label brands is a clear trend, both in terms of packaging and ingredients, both of which play a growing role in shifting consumer choice at the shelf.

Private labels have been continuing to experience substantial grown since the 2008 economic recession. According to Nielsen via The Private Label Trade Show, “The channel has grown in recent years to almost equal the traditional supermarket channel as the place where most buy their groceries. Total sales of all products last year were $305 billion in the mass channel vs. $324 billion in supermarkets.”

+Aldi
+consumer goods
+Convenience & Supermarket
+Food
+Grocery
+merchandising & curation
+packaging & product engagement
+private label
+retail
+ShopRite
+store experience & design
+whole foods

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