Report: U.S. Private Label Spending Reaches 20% of the Total Market.

According to a recent report from global professional services firm Alvarez & Marsal, private label spending in the grocery sector now accounts for 20% of the total market, with projections indicating it could rise to 24% in the coming years.

The report highlights that private label growth continues to thrive even amidst a period of slow expansion in the overall grocery market. For grocers, enhancing private label offerings is not just a trend; it is a strategic imperative that fosters stronger customer loyalty and advocacy while delivering solid returns for shareholders.

Key findings from the report indicate that more than 80% of shoppers base their purchasing decisions on brand trust. Thus, it is crucial for retailers to develop private label brands that resonate with consumers and cultivate strong loyalty. Marco Valentini, managing director at Alvarez & Marsal’s Consumer and Retail Group, stated, “There’s a strong correlation between the most successful private brand grocers and their market share and financial performance. The best players act differently from the rest of the pack. Their C-level executives are committed to growing their own brands and driving differentiation through them.”

In recent years, grocers have intensified their focus on private label growth. During Kroger’s earnings call, CEO Rodney McMullen emphasized the retailer’s commitment to keeping prices low through its various private-label brands, noting that private label sales outpaced national brands in the second quarter. “More than 90% of our customer households purchased our brands’ products during [Q2],” he shared, adding that they are expanding into new categories and have launched nearly 600 new products this year.

Additionally, Amazon Fresh recently unveiled Amazon Saver, a new private-label brand featuring over 100 products, most priced under $5. Walgreens also entered the private label arena with a premium skin care line earlier this month and launched the Nice! For You brand focused on healthy products, expanding on its existing Nice! brand that debuted in 2011.