ALEXANDRIA, Va.—Store brands are enjoying a resurgence as convenience retailers, grocers and mass merchandisers alike look to catch the eyes and wallets of consumers with exclusive products that aim to outshine major brands.
“How we shop and where we shop is changing,” Carman Allison, NielsenIQ vice president of sales development, told the Wall Street Journal. “Retailers are investing in their private-label brands as they seek ways to differentiate themselves and meet evolving consumer needs,” Allison told the Journal.
Margins on private-label food products average anywhere from 10% to 40% higher than sales of national brands, the Journal notes.
“The biggest motivation for us is having products no one else has,” Mike LaVitola, CEO of Chicago-based convenience retailer Foxtrot, told the Wall Street Journal. Among the fast-growing c-store’s private-label goods is a house bourbon selected by Violet Hour, a Chicago cocktail bar, and a limited-time-offer hot cocoa developed with a Chicago pastry chef. The retailer has a private-label brand of wines sold under the label Sun Lips in partnership with importer Skurnik Wines & Spirits. Foxtrot’s store brands account for about 30% of the store’s overall selection, the Journal reports.
Ankeny, Iowa-based Casey’s rolled out a line of own-label soft drinks, juices and ready-to-drink iced teas and lemonades, plus packaged snack cakes, in November 2020 as the chain relaunched its private-brand program. Then in January 2021, the c-store added more than 100 Casey’s branded snacks and beverages and continues to consider adding to its private-label assortment.
“We think we can play in the private brand space and virtually any category,” Darren M. Rebelez, president and CEO, said during a presentation last week at the virtual ICR Conference.
Rebelez cited three hurdles before Casey’s introduces a new private-label product: Quality must meet or exceeds national brands; price must be lower than the national brand and profit must be higher than that of a similar national brand.
“We have a fairly high bar to set just to get into the assortment,” Mr. Rebelez said.
According to 7-Eleven, about eight out of every 10 Americans buy private-brand products to save money, NACS Magazine reported in “Private Matters” in the April 2021 issue. Millennials have a particular affinity for the value and quality that the brands offer, the chain said, and are contributing to the growing popularity of retailer brands.
The opportunity for improved profits is one motivator for retailers considering private-label products.
“In some cases, margins could be 25% versus 18% for a national brand,” said Roy Strasburger, president of StrasGlobal, a Temple, Texas-based convenience-store operations and consulting company. Marketing and promotional control over the brands is another benefit, allowing c-stores to become destinations for products not available anywhere else. “If done successfully, it’s not the store pushing the product, but the product pushing the store,” Strasburger told NACS Magazine.
A category deep dive at the 2022 NACS State of the Industry Summit, which will take place April 12-14 in Chicago, will cover private-label performance in the convenience retail channel. Hear from Ben Hoffmeyer, vice president of marketing and foodservice, Texas Born Stores (TXB), who will lead the session.