Private label (PVL) CPG items are essential for grocery retailers, offering higher profit margins and helping to build customer loyalty. These store brands allow retailers to differentiate themselves from competitors by providing unique, high-quality products that often come at a lower price than national brands. By controlling the supply chain, retailers can quickly adapt to market trends and maintain consistent quality, reinforcing their brand identity and value proposition.
Moreover, private labels give retailers the flexibility to experiment with new categories and respond to consumer demands more efficiently. This competitive edge not only enhances the retailer’s market position but also pressures national brands to innovate and improve, ultimately benefiting consumers with better choices and prices. Private label represents a cross-channel market of over $200B, growing an average of +7% over the past three years.
Source: SPINSScan Natural Channel (proprietary), Conventional Multi Outlet (powered by Circana), Trended Aggregates weeks ending 07.14.24, Brand = Private Label + Private Label Organic, ‘Branded’ = Total store less PVL
For the most recent 52 weeks, PVL sales capture 1/5th (22%) of total cross- channel sales, with PVL sales outpacing branded dollar and unit growth. While PVL growth has slowed in recent times, over the past three years PVL has still managed to chip share away (+1.2pts) from their brand counterparts.
Department Performance
Private label reach crosses into every depart of the store, to varying degrees. At the forefront, Grocery PVL represents the largest segment, accounting for nearly a 1/3rd of total store PVL sales. However, from an influence perspective, PVL Grocery items contribute more than double their share (65%) towards overall PVL growth. Other departments contributing more than their ‘fair share’ towards overall PVL growth include general merchandise, pet, body care, and vitamins and supplements. Private label dollar and unit growth remained moderate across most departments.
Private Label Representation
Understanding total PVL share by each department is part of the story, it is also valuable to understand the assortment within each department. While Grocery represents the most PVL dollars relative to the rest of store, within the Grocery department PVL represents less than 1/5th (18%) of total Grocery sales.
Source: SPINSScan Natural Channel (proprietary), Conventional Multi Outlet (powered by Circana), 52 weeks ending 07.14.24, Brand = Private Label + Private Label Organic, ‘Branded’ = Total store less PVL
Other departments that have a higher propensity to lean into private label include Refrigerated (35%), Produce (31%), Medicine & Personal Health (28%), General Merchandise (27%) and Frozen (26%), putting the Grocery department in the middle of the PVL pack.
Private Label Innovation
Retailers can leverage private labels to explore new categories and quickly adapt to consumer needs. Private label new items that entered the market within the past 24 weeks amounted to 2,828 new UPCs and $665M in sales, across the entire store. While a sizeable contribution, new private label entrants are down versus last year, both in terms of count of UPC (4,148 LY) and dollars ($2.9B LY). However, across both years, we see a similar distribution across the store.
Grocery PVL innovation leads the other departments, with the most recently added items, accounting for the most units/dollars. Trailing further behind, including the Refrigerated, and Frozen departments. Within those departments, we can see some similarities into where PVL is exploring innovation.
Grocery PVL innovation leads the other departments, with the most recently added items, accounting for the most units/dollars. Trailing further behind, including the Refrigerated, and Frozen departments. Within those departments, we can see some similarities into where PVL is exploring innovation.
For example, PVL expansion is seen within Bread & Baked Goods, for both the Grocery and Frozen departments. Similar expansion is also seen within the Meat Poultry & Seafood segments within both Refrigerated and Frozen departments. Snacks are another common area for PVL innovation across all departments. Based on these developments, its clear PVL reach continues to increase where brand loyalty may vary.
Product Dichotomy
The relationship between private label and branded items allows grocery retailers to meet diverse consumer needs while optimizing profitability. Private labels offer affordability and exclusivity, enabling retailers to differentiate themselves and attract price-sensitive shoppers. They provide higher profit margins and flexibility to adapt to market trends. In contrast, branded items bring consumer trust, consistent quality, and strong loyalty, driving significant foot traffic and sales. While margins may be lower, their high sales volume contributes to overall store success. By balancing private labels with branded products, retailers can appeal to a broad range of customers, maximizing both satisfaction and profitability.
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Looking for more information? Please contact the SPINS Account Manager for PRESENCE, Mike Murphy at mmurphy@spins.com.
(847) 277-9500