Private Label Growth Poised to Reignite in 2021
Retail Dive | April 27, 2021
Last year, for the first time in a decade, sales growth of national brands outpaced the growth of private labels, according to NielsenIQ data. Store brand manufacturers like TreeHouse Foods struggled to shift their supply chains amid demand spikes, while major brands were able to narrow assortments and focus on best-sellers.
Private label outpacing national brand growth is set to resume this year, as retailers and suppliers face a more normalized supply chain environment along with new consumer dynamics. Eighty percent of consumers say they're restructuring their spending habits, according to NielsenIQ.
Tracking consumers' attitudes toward spending over the past year, NielsenIQ categorized two groups: "constrained" and "insulated." The "Newly constrained" consumers increased from 23% to 46% between September and December, indicating a higher percentage of shoppers closely watching their budgets as uncertainty continues.
Both constrained and insulated shoppers buy private labels, with insulated shoppers gravitating more toward new and innovative products. But tighter budgets tend to play to the benefit of store brands, which have extended across store categories over the years and have increased the quality and sophistication of their offerings.
Online shopping is shaping up to be the next major merchandising opportunity for private label. Two-thirds of consumers say they're shopping both in stores and online. Private label accounts for just 4% of grocery e-commerce sales, but that number has quadrupled over the past two years, indicating an opportunity for retailers to capitalize on rising omni-shopping habits.