You can’t help but sense the bullishness in the results of this year’s SN Center Store Survey, which appear in this issue beginning on the front page. A total of 28.8% of retailer respondents expect gains in center store dollar sales of between 2% and 4.9% this year, 19.5% anticipate growth of 5% to 10%, and a very upbeat 5.9% predict a rise of more than 10%.
You need to peer deeper into the results to find out what’s generating this growth, and one of the top drivers is private label. Some 69% of retailers said private label represents a bigger portion of shopper baskets versus a year ago.
The survey not only underscores this growth, but it hints at what’s ahead for private label in the near-term.
Store labels are increasingly being used as competitive weapons to battle the onslaught of other types of retailers selling food.
Retailers taking the survey pointed to Walmart, dollar stores and natural food retailers as the biggest threats to supermarkets’ center store sales, but conceded there are others as well.
Asked how supermarkets can best fight competitors for center store sales, the top answer was private label (23.7% of retailers). Almost the same percentage cited price, and it’s apparent from comments throughout the survey that retailers see store labels and price as closely linked strategies in a value equation.
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“Consumers are looking for values and thus switching to private labels,” said one food retailer.
Another pointed out that continued enhancements in quality and standards are making consumers feel more comfortable trying private label products.
Of course, it’s not news that consumers are seeking more value, but it’s interesting this is still so prominent five years after the end of the Great Recession.
Private label’s value component will continue to support retailers in their battle to maintain and grow market share.
There’s even more in the survey about the future of store labels. Respondents opened a window on how private label will grow in the future.
Asked in which categories they plan to add to or update private label offerings in the next year, 51.7% of retailers said natural/organic, 46.6% said specialty, including gluten-free, local, imported and non-GMO verified, and 45.7% said new product innovations (percent totals exceeded 100 for this question to reflect multiple answers).
“An ethnic product will add another dimension,” said one food retailer respondent.
Said a food wholesaler: “As the consumer base becomes more educated about healthier choices, the private label products must change to meet these needs.”
Much of the industry is converging on Chicago for the FMI Connect event, June 10 to 13, and one of the attractions is a Private Brands Summit track that reflects the importance of this topic.
SN’s survey findings point to a considerable runway for private label growth, representing the next chapters for a segment that’s grown over many years. Our results are further evidence that private brands will remain in the top tier of retailer competitive strategies
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