Store brand sales in supermarkets are burgeoning and are expected to grow even more important in a future dominated by cost-conscious Millennials.
Store brand sales reached $118.4 billion in 2015, an all-time record and increased $2.2 billion over the previous year, says the Private Label Manufacturers Association.
In 2014 and 2015, annual sales were up 5%, or $5.4 billion, in the major retail channels, finds PLMA’s 2016 Private Label Yearbook, which analyzes sales data provided by the Nielsen Co.
Another PLMA survey of consumer buying habits found that shoppers in the Millennial generation are willing to buy more store brands when they promise healthier alternatives at lower cost.
PLMA President Brian Sharoff says, “Store brands remain the retailer’s most potent weapon in developing strategies for this age group.”
Using store brands also offers flexibility and opportunities to be creative with product assortment and concept without waiting for national brands, he points out. “But it requires an understanding of what this age group likes and will buy,” Sharoff emphasizes.
Store brands’ dollar share came to 17.7%, also the highest mark ever. Across all food retail outlets combined store brands sales grew 2%, a performance that equaled that of national brands, which also rose 2%.
Focusing on supermarkets, total sales of store brands were $62.5 billion, roughly even with the prior year, PLMA reports.
Over the two-year period, sales are up in the supermarket channel by 2%, or $1.1 billion. With unit share at 22.9%, nearly one of every four items sold in the country’s supermarkets last year was a store brand.
When it comes to drug chains, store brand dollar sales rose nearly a percentage point to $8.4 billion last year, while national brands fell about a point.
Figures for all outlets come from total U.S. supermarkets with annual sales over $2 million, drug chains with annual sales over $1 million, mass merchandisers, club and dollar store channels, and the military exchanges.
Looking beyond these traditional outlets and the data available from Nielsen, a more comprehensive figure for annual store brand sales in food and non-food consumables would include an estimated $20 billion or more in revenues from chains positioned as either niche providers or no-frills discounters.
These kinds of chains range from Aldi and Save-A-Lot, to specialty chains such as Whole Foods and Trader Joe’s, as well as small convenience stores.
If counted, these outlets would produce a grand total of nearly $140 billion in sales, PLMA notes.
Even that total does not take into consideration store brand products sold by chains specializing in office supplies; hardware, tools and do-it-yourself; home improvement, home decor and domestic goods; consumer electronics, baby care, pet care, toys, personal care and sporting goods.
These are just a few of the non-grocery retail channels that are marketing a growing variety of store brand items.
“Store brands continue to represent outstanding value for consumers,” PLMA asserts.
It cites a study by the National Bureau of Economic Research that finds shoppers could save an estimated $44 billion a year by buying store brand products over national brands.
PLMA says that its market basket research consistently reveals that shoppers can save about one-third on basic food and household items in a typical supermarket by opting for store brands over national brands.