Rising inflation continues to fuel private label growth across the US, but price alone is no longer the only motivator for shoppers choosing store brands, according to new research from Circana.
The US leads the world in private label dollar sales growth, with food and beverage categories dominating the sector. However, store brand sales in health and beauty remain stagnant and underdeveloped, the study found.
Younger consumers are at the forefront of this shift, with 44% of Gen Z shoppers and 39% of younger millennials recently trying private label products for the first time.
This is followed by 29% of older millennials, 27% of Gen X and younger boomers, 18% of older boomers, and 16% of seniors.
Despite inflation showing signs of easing, private label sales continue to gain momentum.
Last year, sales climbed nearly 4% to a record $271 billion, according to the Private Label Manufacturers Association.
While store brand unit sales have risen more than 2% since 2021, national brands have declined by almost 7%.
“Private label will continue its growth trajectory, but the next wave of growth may come from different places,” said Sally Lyons Wyatt, global executive vice president and chief adviser at Circana.
“While value channels have recently driven private label gains, expect more grocers – both large and mid-sized – to invest more aggressively, making private labels a core growth strategy.”
Almost every US household, 99.9%, purchased at least one private label grocery product in the past year, according to a December Numerator report, with strong demand also seen in household products, home and garden, and health and beauty.
For Lyons Wyatt, while price will always influence a consumer’s choice to buy a private label, it will no longer be the primary deciding factor.
“Retailers will continue to tier their offerings with more margin-accretive premium products, while also leaning in on entry price-point products,” she added.
“As retailers continue to build brand equity, they may rethink pricing and promotion strategies, but innovation – including with new products, localization, regionalization or unique partnerships – will continue to take center stage.”
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