Forget the utilitarian packaging and low-to-mid quality of decades past. Store brands have gone upmarket.
But store brands, also known as private labels or “own brands,” are eroding their bleak reputations and transforming themselves from dull to desirable. At Foxtrot, a fast-growing chain of trendy convenience stores, House Bourbon is handpicked by the bartenders of Violet Hour, a Chicago craft-cocktail bar, and its potato chips come in flavors like spicy dill pickle and Himalayan salt and vinegar. Online grocer Thrive Market specializes in well-priced staples like coffee and coconut milk with an ethical and eco-friendly pedigree.
Meanwhile, Whole Foods Market rebranded its standard 365 line with a more eye-catching, whimsical look, and Target, a pioneer of innovative private-label brands, has doubled down on trendy foods with Good & Gather, a line that Including the basics—and not—things seen elsewhere like Peach Bellini Fruit Spread and Brownie Batter Dessert Hummus.
In short, store brands are no longer the cheap knockoffs you keep hiding in the back of the cupboard, but probably the tastiest deals on the shelf.
“How we shop and where we shop is changing,” said Carmen Ellison, vice president of sales development at research firm NielsenIQ. “Retailers are investing in their private-label brands as they explore ways to differentiate themselves and meet growing consumer needs.”
Store brands have always been big business – and for good reason. These more affordable products actually make the store more money. Margins on private label food products average anywhere from 10% to 40% higher than sales for national brands. Still, it wasn’t until recently that a wide range of grocers decided to follow in the footsteps of cult grocer Trader Joe’s, upgrading packaging and offering products that aim to please rather than just suffice.
Two trends are driving the change. The first is looking for customer loyalty. There are an increasing number of grocery retailers in today’s market: traditional supermarkets, discount stores such as Aldi and Lidl, “do-good” online grocers (Thrive Markets among them) and there are 800-pound gorillas in it. space, amazon,
Where shoppers used to make up one big store a week, the average consumer now goes to three or four different stores for groceries, according to Mary Ellen Lynch, a principal at the research firm IRI. Sexy, exclusive store brands are a way to entice customers back. “The biggest inspiration for us is products that no one else has,” said Mike Lavitola, chief executive of Foxtrot, which has stores in Chicago, Dallas and Washington, D.C., and plans to open 50 more outlets over the next two years. Is.
Foxtrot’s products do not imitate national brands, but aim to outperform them in quality and design. The line’s ice cream, for example, comes in high Falutin flavors like Roasted Banana and Caramel and Cinnamon Crumble. Some foxtrot products, such as the seasonal hot chocolate mix developed with Chicago pastry chef Mindy Segal, collaborate with respected local food artisans to provide customers with high quality and a halo effect to foxtrots.
Other products bear no trace of the Foxtrot logo. In partnership with importer Skurnik Wines & Spirits, the Foxtrot chain bottled three French wines, including a rosé sold under the Sun Lips label. “You’d never know it was our private label, and that’s it,” said Mr. Lavitola. Last summer, sales of Sun Lips were more than twice that of Foxtrot’s next best-selling rosé. The chain reports margins on all private-label products of 10-15% above that of outside brands. No wonder Foxtrot’s store brands now make up about 30% of the store’s total selection.
Thrive Market also focuses on offering premium store-brand products. For its customers—many of whom follow special diets like paleo, keto, and gluten-free—that means a lot of clean-label staples. Take coconut milk, one of Thrive’s perennial bestsellers. Most brands add thickened guar gum to give the product a silky consistency. But Paleo followers vehemently object to the additive. So Thrive made its own coconut milk, which sells for a little less than the leading national brand, Guar-Gum-Free.
As an online-only grocer, Thrive has also built brands to solve customer-delivery issues. Canned beans, for example, are a popular staple, but they are heavy and therefore too carbon-intensive to ship. They roll around in the box and crush other objects. Thrive’s house-brand beans now come in lightweight plastic pouches.
Established grocers are also raising their game. In addition to its $2 billion Good & Gather brand, Target last spring launched Favorite Day, which includes more than 700 snacks and desserts like frozen French macarons and crme brlée. Shoprite‘s
The Bowl & Basket brand, with its soft color scheme and plant-based items, is another contender competing for high-end buyers.
The rapid growth of store brands can also be chalked up to the pandemic, which exposed established buying patterns. In the spring of 2020, Americans faced a sea of empty shelves; Tried many store brands out of necessity. According to a September 2020 study by management consulting firm McKinsey & Company, nearly one in five shoppers said they bought more private-label products during the COVID-19 crisis than before. And of those who switched to new brands, 40% said they would continue to buy them even after the pandemic subsided.
The numbers bear it out. According to NielsenIQ, private-label food sales in 2020 were $123 billion, up 13.6% from the previous year. And although sales eased in 2021 as the supply chain came back online, Mr Allison (NielsenIQ analyst) said he expects retailers to continue to innovate. Premium private label appears to be here to stay.
Businesshala is not compensated by the retailers listed in its articles as outlets of the products. Listed retailers are often not the only retail outlets.