Private Label Foods Flourish

Retailers are growing their own brands for groceries and other packaged foods.

September 04, 2019

SEATTLE—Amazon keeps expanding the number of products under its Amazon Basics private label and so are Target, Kroger, Aldi, Wawa, Rutter’s and 7-Eleven when it comes to their own private brands. But the biggest private-label growth is in food products, Media Post reports. According to a new survey by MRI-Simmons, a consumer research company, the most bought store-brand category is food—58% of shoppers bought such an item within the past 30 days.

While the average profit margin for grocery hovers around 1.3%, private label products generate 25% to 30% more gross margins over name brands, according to CB Insights. Private label brands are popular with consumers, too.

According to IRI, shoppers gravitate toward store brand food and beverages to save money. Target is one retailer who hopes to capitalize on that trend, announcing last month that it would expand its private label items into non-edible categories, such as sportswear, stationery and electronics. But the retailer plans to develop its Good and Gather store branded food and beverage category as well.

“We know that food and beverage is a big reason our guests like shopping at Target, since nearly three quarters of our baskets have at least one food item in them,” said Mark Tritton, executive vice president and chief merchandising officer. “And driven by the improvements we have implemented over the last two years, we have been seeing consistent growth and market share gains in food and beverage for well over a year.”

Target plans to include 2,000 of its own private label items on its shelves to heighten the sales produced by in-store brands within a year’s time.