Report: U.S. Private Label spending is now 20% of the total market

Private label spending in grocery represents 20% of the total market and is projected to rise to 24% in the next few years, according to a new report.

Those were the key findings in a recent report focused on private label growth from global professional services firm Alvarez & Marsal.

The report looks at how private label continues to accelerate even during a period of slow grocery market growth.

Private label traction is also a strategic imperative for grocers, allowing them to build stronger loyalty and advocacy with their customers while delivering strong returns for shareholders, according to the report.

The report said more than 8 in 10 shoppers make decisions based on brand trust, so “developing private label brands that resonate with consumers and provide strong advocacy is critical,” the report said.

“There’s a strong correlation between the most successful private brand grocers and their market share and financial performance,” said Marco Valentini, managing director at Alvarez & Marsal’s Consumer and Retail Group. “The best players act differently from the rest of the pack. Their C-level executives are committed to growing their own brands and driving differentiation through them.”

Grocers have been leaning heavily into private label growth in recent years. During Kroger’s earnings call on Thursday, CEO Rodney McMullen said the retailer aims to keep prices low for customers through its multiple private-label brands. He added that private label outpaced national brands for the second quarter.

“More than 90% of our customer households purchased our brands’ products during [Q2],” he said. “Across the portfolio of our brands, we are expanding into new categories and launching new products with almost 600 already introduced this year.”

On Tuesday, Amazon Fresh launched Amazon Saver, a new private-label brand that featuring more than 100 products, most of which are under $5.

Walgreens also came out with its own premium label skin care line earlier this month, and earlier in the year the retailer launched a new private-label brand focused on healthy and better for you products.

The new product line, Nice! For You, is an addition to Walgreens’ Nice! brand, which was first launched in 2011.