Is Private Label Food the New Business Model Power Paradigm?

 

The retail industry is witnessing a paradigm shift, with private label products becoming a formidable force. Recent data underscores this trend, revealing a substantial surge in store brand market share. According to Circana sales data, store brands achieved unprecedented highs in both unit and dollar share during the first six months of 2024, compared to the same period last year. As of June 16, unit market share stood at 22.9%, and dollar market share at 20.4%. Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® believes that at its core private label is clearly ascending fresh prepared food to levels not even dreamed about five years ago.  

The Surge of Store Brands

PLMA President Peggy Davies aptly described this as the "store brands phenomenon," which is transforming the retail landscape across all channels, departments, and categories. The superior performance of store brands at checkout, compared to national brands, is a significant contributor to this trend. Store brand dollar sales increased by 2.3%, outpacing the 1.1% gain of national brands. The disparity in unit sales growth was even more pronounced, with store brands rising by 2.5% while national brands declined by 0.8%.

The New Power Paradigm: Facts and Figures

The success of private label products is not just a fleeting trend but a robust business model power paradigm. The total store brand sales for the first half of 2024 reached an impressive $121 billion, compared to $472 billion for national brands. The outlook for the rest of the year is optimistic, with PLMA projecting that total store brand revenue for 2024 will exceed $250 billion, setting a new record for annual sales.

Keith Lincoln and Lars Thomassen, in their seminal work, have long advocated for the potential of private labels. They emphasize that private labels offer retailers higher margins, stronger brand loyalty, and greater control over the supply chain. These advantages have become increasingly evident as more consumers turn to store brands for their perceived value and quality.

Category Performance: A Broad Spectrum of Success

Circana's data reveals that store brand sales are flourishing across nearly all product departments. Here’s a snapshot of the categories that have seen significant gains over the 52 weeks ending June 16:

·         Beauty: +10%

·         Liquor: +8.8%

·         General Food: +6.9%

·         Home Care: +6.8%

·         Pet Care: +5.8%

·         Beverages: +4.3%

·         Frozen: +2.9%

·         General Merchandise: +2.2%

·         Home: +1.7%

The only exception was the refrigerated category, which experienced a slight decline of -0.7%.

The Strategic Advantage of Private Labels

Private labels have become a strategic asset for retailers. By offering products that compete directly with national brands in quality and price, retailers can attract a loyal customer base and differentiate themselves in a crowded market. This is particularly crucial as consumer behavior shifts towards seeking value without compromising quality.

The rise of private labels is also driven by innovation and responsiveness to consumer trends. Retailers are investing in product development, packaging, and marketing to elevate their store brands. This investment is paying off as store brands now represent a viable alternative to national brands, appealing to a broad demographic spectrum.

Looking Ahead

The trajectory of private labels suggests they are not just a trend but a fundamental shift in the retail business model. As Lars Thomassen and Keith Lincoln highlight, the potential for growth in private labels is immense, driven by the benefits they offer to both retailers and consumers.

With the continued focus on quality, value, and innovation, private labels are poised to reshape the retail landscape. As we look forward to the rest of 2024 and beyond, it is clear that private labels are setting the pace, and their dominance is likely to grow.

The Grocerant Guru® perspective is clear: the rise of private labels marks a new power paradigm in the retail industry. Retailers who embrace and invest in their store brands are not just keeping up with the trend; they are setting the stage for future success. The data is compelling, the benefits are clear, and the future of private labels looks brighter than ever.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter

Private Label brand managers need to come out swinging vs. lame slotting fees.

 

Diminished is the role of the legacy national brand manager in a world where private label is branded. When national brand manufactures continue paying slotting fee’s to grocery stores and supermarkets as the easiest way to reach the consumer. The slotting fee’s continue to go for space on the shelf but the key location End Caps are now being filled with the stores own private label products.  If your paying a National Brand manager and your brand value is gone, fire the brand manager or pay higher slotting fees and fool some of the people some of the time.

Who likes slotting fee’s well for one Wall Street analyst love to see sales via pushing slotting fee’s at the end of a slow quarter to meet “goals”.  Why they like it is beyond logical reason.  Mediocre C-level grocery store chain managers like it better than being force to become merchants.  They utilize slotting fee’s to supplement profits.  It justifying being a poor merchant with rationalization. By the way wall street likes that too!  

The brand managers of the private label products are utilizing a tool out of the National Brand Managers playbook to build loyalty, reinforce value and generate additional sales and profits for the store and their particular private label product.  They are taking the end caps for themselves!

Price Chopper is utilizing what they call “power displays”. Wal-Mart is utilizing the end caps to reinforce value of their private label products and consumer is picking them up! Wegmans gets the customers coming and going utilizing the vestibules with the likes of Wegmans private label potato chips and the next week Wegmans own canned tuna and their own mayo for example. I say keep it up!

Deep in the store the private label battle continues with ready-to-eat and ready-to-heat portable food.  All prepared fresh and in most cases right in front of the customer.  Private Label Grocerant ready-to-eat and ready-to-heat food now has brand managers of their own and they are building sales not slotting fees.  Think about it, building sales on demand from consumers?  Novel ideation or business fundamentals, you chose.

The consumer is dynamic not static your company, your brand, and you should be as well.  Tacoma, Washington based www.FoodserviceSolutions.us can help you drive top line sales and bottom line profits in our evolving retail landscape.  Contact: Steve@FoodserviceSolutions.us

Rite Aid Targets Sprouts, Earth Fare, and Whole Foods

 

In a never ending battle for share of stomach Rite Aid is targeting the ‘better-4-you’ space and it’s preminmum profit subset of ‘better-4-you’ snacks.  According to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions®, “Rite Aid is right on, cherry picking the preminium profit sub-category of ‘better-4-you’ snacks.

In case you did not know, Ello Market is a private label snack line at Rite Aid that is focused on healthy eating will garner customers from customers who vist Whole Foods, Sprouts Farmers Market, and Earth Fare.

Taking the lead from the Dollar store sector at successfully cherry picking the grocery store sector, now Rite Adi is doing the same thing to the ‘better-4-you’ grocery store sector.

Rite Aid has divided the new private label ‘better-4-you’ line into categories – Core, Better for You, and Indulgent. Products include “healthy snacks, pantry essentials and indulgent treats,” according to a release from Rite Aid.

So, actual products include things like savory nuts (pistachios and dry roasted peanuts), assorted sweets (chocolate almonds, peach rings and gummy butterflies), as well as trail mix varieties including Protein Trail Mix and Probiotic Trail Mix, and other kitchen items like honey and spices.

Pamela Kohn, SVP, chief merchandising officer at Rite Aid, stated, “We’ve been paying close attention to consumption habits to ensure our offerings fulfill the needs and desires of our customers”.  According oi Johnson snacks are profitable, ‘better-4-you’ snacks are even more profitable.

Looking for success clues of your own? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities, technology, or a new menu product segment.  Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit us on our social media sites by clicking one of the following links: Facebook,  LinkedIn, or Twitter

Back to Work, Tired, Grocerant Niche Mix & Match Meal Components Help

So, you went back to work. You are now wearing a mask, doing extra daily task, along with all of your old job requirements, worried a client or customer might have CORVID 19, and pass it along. So, once again we ask. Do you know what’s for dinner tonight? 

Are you cooking a family meal for two, three, or four, family members? If so the chances are very good your buying several Ready-2-Eat or Heat-N-Eat fresh prepared meal components according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Grocery stores, convenience stores and restaurants are all bundling fresh prepared meal components for the home cook.  The home cook is responding buying individualized components from different retail channel stores/outlets; then mixing and matching them into a customized family meal according to Johnson.

Recent grocerant scorecards found 83.1% of all family dinner occasions have at lease one grocerant niche Ready-2-Eat or Heat-N-Eat fresh prepared meal component. While 68.4% have two grocerant niche Ready-2-Eat or Heat-N-Eat meal components.

Foodservice branded and private label food manufactures are all vying for your attention. Ready-2-Eat and Heat-N-Eat food from the ilk of Swiss steak, Meatloaf, Baked Salmon, Rotisserie Chicken, Pizza and Lasagna fresh prepared, portioned and portable in portions for 1,2, or 5 are all available at most foodservice retail location today.

Most exciting is the opportunity for new start-up’s and regional manufactures to produce sustainable business built on local, fresh and unique flavor profiles.  Legacy national brand manufactures are experiencing an increase in need for repositioning, consolidation and acquisition activities.  Regional start-ups are thriving supplying local restaurants, C-stores and grocery store delis with fresh prepared food.

Consumer are responding buying meal components in new food channels, experiencing new flavor profiles all the while individualizing the family meal.  The foodservice industry is evolving with the consumer.  Those companies looking for opportunity for growth times have never been better. The consumer is dynamic not static are you keeping pace? Are you looking for a new private label manufacture?

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit GrocerantGuru.com for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

Private Label Food Drives Growth, Profits, Branding

Consumers are dynamic not static.  Food retailers have to keep-up with consumers or get left behind according to Steven Johnson, Grocerant Guru®, at Tacoma, WA based Foodservice Solutions® who stated “COVED-19 has garnered consumers attention, trial, and migration to food retailers private label products around the world.  

In the latest edition of PLMA's International Private Label Yearbook has shown that private label share is now above 30% in almost all of Europe, reflecting the same trends we are seeing in the US.

This year's edition of the yearbook, which incorporates Nielsen data to the end of 2019, shows that private label has gained market share in 14 of the 19 countries surveyed.  So, in the UK and Germany, private label share remains above 40%, while in Italy, its share rose by two percentage points, its biggest gain to date.

Yes, people around the world are stuck at home. However, branded private label is new to many, cost less and consumers either prefer it to a legacy CPG brand or rate it the CPG brands equal. One of the biggest increases in private label share was seen in the Netherlands, which was up more than seven percentage points to 37%, boosted by the inclusion of Aldi in the data for the first time. In France, where Aldi and Lidl are not included in Nielsen's data, private label holds a unit share of 31% and a value share of 25%.

Spain and Portugal, meanwhile remain strong markets for private label, with store brands accounting for half of all products sold in Spain, and 43% in Portugal. In central and eastern Europe, market share stayed above 40% in Austria and above 30% in Poland, Hungary, Czech Republic and Slovakia, while in Switzerland, private label accounts for half of products sold.

Norway led the way in Scandinavia, with private label market share climbing two percentage points to more than 34%. Sweden increased to 33%, while Finland stayed above 30%. Lastly, Greece reported private label market share of above 31% for the first time, while Turkey saw share rise two percentage points to more than 30%.

Is your brand looking for additional avenues of distribution? Remember the ‘Frozen Food Court’ we do. Success does leave clues and one should never forget the consumer is dynamic not static.  The trend is your friend.  Have you entered the Grocerant niche yet? What are you waiting for?

Success does leave clues. One clue that time and time again continues to resurface is “the consumer is dynamic not static”.  Regular readers of this blog know that is the common refrain of Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.  Our Grocerant Guru® can help your company 253-759-7869. 

Amazon Go Urban Grocery Store The Grocerant Guru® Just-Walked-Out

Success does leave clues and there is one company in the United States that is not afraid to innovate, learn, and evolve.  That company is Amazon, just about everyone has bought more than a book from Amazon and urban foodies have special relationship with Amazon Go convenience stores. The simple fact is consumers are use to going to an ATM anytime they need cash.  No one wants to go back to the days they need to walk into a bank to get cash.  That same with all three Amazon Go Stores templates, convenience stores, urban grocery, ans suburban grocery its fresh food fast and complexity free. 

Consumers don't go backwards.  Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® was one of the first to visit and review the very first Amazon Go C-store.  Once again, Johnson, was one of the first to visit the Amazon Go Grocery store.  So, just what did our Grocerant Guru® think?  Well he came back to the office and exclaimed, I now want to move to Seattle.  I guess he like it. Here is why:

Just like Amazon Go C-store the first Urban Grocery store checkout process is seamless experience just like Amazon Go C-store filled with grocerant niche Ready-2-Eat and Heat-N-Eat fresh food. It’s true you just simply walk out.  The first Amazon Go Urban Grocery store elevates the urban local grocery shopping experience with local products, including Whole Foods ‘365’ private label, and Amazon Go private label products.

One thing that they do exceptionally well is grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared food.  They offer a variety of ethnic flavored meals and meal components to complement consumers insatiable drive for food discovery.  

Amazon Go Grocery is a small-format URBAN store but a bit to large according to Johnson, albeit offering plenty of fresh meat and produce, options, Heat-N-Eat meals, meal kits, and traditional groceries add on the ilk of dish soap, toothpaste, deodorant, pet food.  

While, Dilip Kumar, Amazon’s vice president of physical retail and technology, stated “Because the customer has different needs... and different things that they look for at different stores, what is it we can we do here in this type of format in this neighborhood to add value? That to me is the selection we carry, the pricing we have — plus the convenience of just being able to walk out.” Kumar knows that rolling out three Amazon Go formats will be a platform for customer adoption and metroplex profitability. 

However, Johnson observation’s after making a return visit only a day after the grand opening, became all to  clear to see why.  Pricing was more than competitive.  The price points were less than any other grocery stores within 2 miles.  Fresh food, fast, and for less, works!  Smaller footprint - less cost, no cashiers - less cost. 

Battle for Share of Stomach

The ability of consumers to find grocerant niche Ready-2-Eat and Heat-N-Eat fresh prepared meals and meal components that can be mixed and matched with good selection of beer, wine and spirits and do it in a complexity fee setting again simply complements all offering according to Johnson.  

What did Johnson like best well that’s simple since he is penultimate morning person in our office fresh brewed Tony’s Coffee, fresh La Parisienne options, Donut Factory donuts, and Seattle Bagel Bakery offerings. A quick cup of coffee and a bit to eat on the way to work will drive incremental daypart sales for the grocery store. In today's food retail these my friends are the basics.  How are you evolving? Packaging for 10 or packaging for 1? 62.8% of US Households had one or two people in 2019 packaging for 1 or 2 trumps selling food for 10.  

Dilip Kumar said Amazon Go grocery stores will be offering free bags with Amazon Go Grocery’s green branding. Johnson, brought two back from his last visit and one is hanging above his desk to inspire the rest of us to make the trip north to find out about the joy of complexity free grocery shopping.

Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869

Fresh Food Grocerant Niche Private Label Brand Managers are Needed

Do you want to eat soup from a can? Ready-2-Eat and Heat-N-Eat fresh prepared food, yes,  grocerant niche retail food offerings are driving top line growth in every sector of retail food service.  In 2019 according to Steven Johnson Grocerant Guru® at Tacoma, WA based Foodservice Solutions® grocerant niche products are increasing top line revenue, customer continuity, bottom-line profits for both retailer and manufactures.

Customer continuity means maintaining a level of excitement in your menu local sustainable fresh food or food products that drive contemporized relevance for your customer in order to maintain or increase frequency levels for branded retailers.

Johnson believes that creating or identifying distinctive differentiated food consumable’s as an entity with identity by day part is an area each brand must focus.  Understanding the unique balance between palate, price, pleasure and the consumer’s drive for qualitative distinctive differentiated new food consumables creates a platform for ongoing success.

In 2019 the food value proposition equilibrium for the consumer today balances; better for you, flavor, and traditional products all blended into something with a twist.  In industry speak, differentiated does not mean different to the consumer it means familiar.  With or help many private label brand managers have been contributing by expanding quality offerings while displacing legacy national brands.  Are you edifying your menu or product offerings?

Foodservice Solutions® team can bring outside eyes sheading new light and assist in your pace of growth, redevelopment, and deployment of your new menu’s sku’s with appropriate COG’s. The Foodservice Solutions® team is very good at assisting companies, teams, and individuals exceed their goals. The grocerant niche is in need of private label brand managers to assist in building long term brand value for both individual products and brands. Should we be talking with you?

Are you looking for a new partnership to drive sales? Are you ready for some fresh ideations? Do your food marketing tactics look more like yesterday that tomorrow?  Visit www.FoodserviceSolutions.us for more information or contact: Steve@FoodserviceSolutions.us Remember success does leave clues and we just may have the clue you need to propel your continued success.

Customers Like Shopping at Costco Online

Battle for Share of Stomach

It’s never to late to cater to customers.  While Costco was late to get serious about internet retail much like Dominos Pizza was when Costco got serious they had picked up all of the right clues and they are now leveraging long standing customer value to drive incremental sales online according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

Just like Dominos pizza going from lager to leader with online pizza sales, Costco is now the new ‘King” online retailers, surpassing Amazon, which held the No. 1 spot since 2010, according to the American Customer Satisfaction Index (ACSI) Retail and Consumer Shipping Report 2018-2019.

The ACSI determines customer evaluations of the quality of products and services available to U.S. consumers, with all measures reported on a scale of 0 to 100, so let’s look at what they found:

1.       Costco scored an 83 on ACSI’s scale, likely thanks to its Kirkland private brand, offering quality products at a low cost, which helps keep competing brand prices low.

2.       With its retail business growth slowing since its acquisition of Whole Foods Market, Amazon retreated 4% to an ACSI score of 82, matching the combined score of smaller online retailers, which are up 1% year over year, per the report.

3.       Target Corp. trails Amazon in internet retail with an ACSI score of 80, while Walmart Inc. anchors the bottom of the category with a score of 74.

Here is what all food retailers need to think about according to the ACSI report, “the internet remains consumers’ preferred method of shopping, despite falling 2.4% to an ACSI score of 80.”

4.       Customer satisfaction with supermarkets sank 1.3% to an ACSI score of 78, according to the report. However, 5.

5.       Trader Joe’s Co. and Wegmans Food Markets showed 1% improvements over the last year, with Trader Joe’s rising to a score of 86—bringing it to the No. 1 spot across all supermarkets and retailers, including e-commerce giant Amazon (82)—and Wegmans rising to a score of 85.

6.       Publix Super Markets fell 2% to tie with Aldi, which remained unchanged, at 84. Costco also remained unchanged in the supermarket category, with a score of 83, while most other large chains declined. For example, H-E-B slipped 1% to 82, and Sam’s Club dropped 2% to 80.

7.       Whole Foods also dipped 2% to 79, despite its acquisition by Amazon, bringing it to a tie with BJ’s Whole Sale Club (down 1%), Hy-Vee Inc. (down 2%), The Kroger Co. (down 2%), ShopRite (unchanged) and the combined score of smaller supermarkets (down 2%).

So, how is your brand evolving to drive food sales, beverage sales, online or in the store? What are you doing to expand your brands customer relevance and drive sales better than other food retailers? Is your brand creating a platform that is consumer interactive and participatory?  No, well we can help.

Invite Foodservice Solutions® to complete a Grocerant Program Assessment, Grocerant ScoreCard, or for product positioning or placement assistance, or call our Grocerant Guru®.  Since 1991 www.FoodserviceSolutions.us  of Tacoma, WA has been the global leader in the Grocerant niche. Contact: Steve@FoodserviceSolutions.us or 253-759-7869