Grocery Leaking Private Label Share to Other Channels: Report
Private label in grocery is leaking share to other channels, new research from Food Marketing Institute (FMI) and market research firm IRI shows. This is despite "dramatically increased" performance in the grocery channel and annual sales of $138 billion across multioutlet plus convenience-store retail channels in 2017.
Retailers overall have made considerable progress not only in reversing sales declines, but also in closing the gap with national brands, supported by a "reduced sting" from deflation. But retailers specifically outside of the grocery channel – including mass and club operators – have been performing "much better" in private label.
Mark McKeown, principal of client insights for Chicago-based IRI, noted that there's a "special hurdle" food retailers must clear despite the overall news for private brands being good. With the new research, his team specifically tried to uncover why the biggest growth in private label is taking place outside the grocery channel.
"While overall private-brand sales improved, it’s important to consider consumer trends in addition to where they are spending their food dollars," Doug Baker, VP of industry relations at Arlington, Va.-based FMI, told Progressive Grocer. "Supermarkets have stabilized their role as the ‘primary store,’ but this status matters less as shoppers add on other nontraditional channels as frequently used sources."
Remaining "primary" with consumers today doesn't mean maintaining a steady share of grocery-shopping trips, Baker noted. This is why the industry is seeing private label performing best outside of grocery. IRI indicates that the growth must therefore be coming from the mass-dollar-club channel.
"It’s evident that the private-brand picture depends on the channel," Baker said. "Therefore, traditional grocery retailers that have private brands as one of a number of strategies for consumer engagement and loyalty should mine their customer data to identify and better understand shoppers’ motivations."