Private Labels Influence Retailer Choice

Buying store brands used to be viewed as sacrificing quality for price, but post-recession private labels began flourishing and have gained popularity with retailers and consumers over the past decade. 

According to Kantar Consulting data presented at Groceryshop, 85% of the US population buys private-label products. More choose private labels to save money (56%) rather than for the quality of the product (43%), but both are drivers. 

Private labels are the reason many shoppers choose particular retailers; 66% said that if they like a retailer, they generally assume they will also have good store brand products. Trader Joe's (70%), Costco (63%) and Aldi (61%) all have high numbers of customers who come for the Trader Giotto's frozen pizza or big tubs of Kirkland mixed nuts. 

Amazon had the lowest levels of attracting shoppers with private labels (29%). Despite launching multiple private-label brands spanning many product categories, Amazon has had the best luck with commodities like batteries and cleaning supplies.

A fondness for private labels spans demographics. In a new study by Cadence Consulting Group, a majority (54%) of millennials said their choice of retailer is influenced by private labels offered. Additionally, 60% thought their chosen retailer's store brand was better than others.

At least half of millennials were open to buying private-label products in any category and 48% expected to buy more next year. They were most likely to buy things like generic ibuprofen (74%), store brand toilet paper (72%), private-label cereal (72%) or frozen peas (71%) than other products. There is more hesitation with makeup, baby products and personal care items.

Private labels are one of the most competitive tools in retailers' arsenals. Kroger's natural line Simple Truth will sell select products in China through Alibaba, and Target, which has many private labels, launched a new home goods line Made By Design in June. In the past year, even online-only retailers like Jet.com and Boxed have launched their own lines like Uniquely J and Prince & Spring, respectively, to appeal to millennials and higher-income consumers.