Amid rising costs, shoppers turning to private label brands

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Grocery prices are up 15.1% from a year ago and up 7.4% since the start of 2022, marketing firm Numerator reported in July. With spending elevated and optimism at an all-time low according to the firm – less than half (47.4%) of consumers rated their financial situation as “good” or “very good,” down from 56.2% of consumers last July – shoppers are finding solace in private label goods, which are typically more affordable than name brand items.

The Food Industry Association, also known as FMI, reported in July that private brand purchasing is growing with inflation as 41% of shoppers surveyed this spring said they bought more store brand items now than they did pre-pandemic.

A majority of those surveyed (77%) told FMI that they’d continue to find space for store brand items in their shopping carts.

“While we know price and out-of-stocks have led consumers to try more private brands, we’re seeing these factors aren’t the only reasons shoppers continue to purchase private brand products,” says FMI’s Vice President of Industry Relations Doug Baker in a statement.

Shoppers who report buying more private brands chose value (63%) and price (55%) as leading factors in their decision to do so. That’s not all, though: Those surveyed said quality (43%) and taste (42%) are also motivating factors, signaling premium expectations despite budget price tags.

“When it comes to taste and quality, shoppers clearly see private brands as a good option, on par with national brands,” Baker said.

“Today when we draw our specs up on private label, we insist – if we’re putting our name on it, we clearly want to be putting a good product out there,” Lou Scaduto, owner of five Super Foodtowns in Monmouth and Ocean counties, said in an interview. “Back when I started, [private label] was a lower grade. The national brands were powerhouses back in the day and you couldn’t compete, but that’s swung around. We want to put high quality on our banner, make sure it’s the best quality it can be.”

Last year, FMI found that 9 in 10 food retailers and manufacturers it surveyed planned to ramp up their private label offerings in the next two years. Several local and national retailers already have.

ShopRite, a banner of Keasbey-based Wakefern Food Corp., launched private labels Bowl & Basket and Paperbird in 2019, the same year Target launched its now-2,000-item-strong label Good & Gather. Two years prior, Wakefern launched its other private label, organic-focused Wholesome Pantry.

“There were a variety of reasons for investing in and reimagining our private label brands in 2019, including the desire to meet changing customer needs, trends and the competitive landscape,” said Bryant Harris, Wakefern’s chief merchandising officer. “Our promise was to provide high-quality store brands at low prices delivered in beautiful, contemporary packaging that our customers could be proud to put on their table and serve to their families and friends. It was a strategic investment with a laser focus on value, quality and innovation, and our customers have embraced the brands.”

Save A Lot, a grocer with several locations in New Jersey, has put its private brand front and center of a new marketing campaign. In the ads, national brand items like Jif peanut butter and Smuckers preserves are suspended in a graphic with Save A Lot’s own NutSome and Bramley’s brands with the words “Tastes Alike. Saves A Lot.” The company’s chief sales and marketing officer Tim Schroder told industry publication GroceryDive that the campaign aims to have customers consider their private brands as on par or even better than their national analogs.

FMI found there were demographic differences in private label shoppers. Private label shoppers skew female (58%) and are more likely to be millennial (37%) than baby boomers (22%). It’s likely that they head households with kids (40%), and about half of private label shoppers (48%) make $50,000 or less in household income. Still, they tend to spend more on groceries weekly ($168 verses $152). They’re also more likely to come from rural areas or small towns (41%) or urban areas (31%) compared to suburban areas (28%).

At his stores, Scaduto noticed that Gen Xers and millennials were private label’s biggest fans.

In its 2022 Power of Private Brands report, FMI noted that grocers have “a huge opportunity to enhance how their private brands show up” on their websites as a portion of consumers continue to shop online post-pandemic. FMI also urged grocers to prioritize shoppers’ unmet needs by figuring out what they are. When asked “What could your primary store do to make store brands more appealing?” those surveyed answered, among other things, distinct packaging, a bigger variety of product sizes, more organic options, and healthier ingredients.

Harris said Wakefern is always evaluating its markets and may add more owned brands in the future. Later this month, it will host its first Own Brands Supplier Innovation Summit to source new and trending food and beverages for its owned brand lines. Today, innovations within its owned brands are gaining recognition: Bowl & Basket Specialty Gorgonzola and Walnut Ravioli won a Private Label Manufacturers Association Salute to Excellence Award in the ‘Food & Drink Pasta’ category last year; and previously, Wholesome Pantry received PLMA awards in ‘Healthy Eating & Natural Foods’ and ‘Spreads’ categories.