This guest post comes from Kelly Thompson Kell, North American Market Strategy Director for Trace One.
As the global grocery sector swirls with change, one thing is clear: Private brands are hot. According to Nielsen, by the last quarter of 2017, private brands earned dollar growth of more than three times the rate of national brands.
That’s why global retail giants are prioritizing private brands. Even Amazon has at least 80 own brands across categories – excluding Whole Foods’ 365 line. Private brands boost retailers’ greater agility, speed to market and exclusive products, which drive sales and loyalty.
These trends shape private brand development:
- Lifestyles: Amid the booming health and wellness lifestyle, Aldi adapted its private brands to include products free from synthetic colors, trans fats and MSG. Tesco and Sainsbury’s launched private brand vegan ranges, including plant-based proteins.
- Convenience: For simplicity and speed, direct-to-consumer e-commerce startups like Brandless shorten the supply chain by bypassing retailers. Grocers also sell private brand meal kits, like Kroger’s Prep+Pared line.
- Differentiation: Unique private brands set retailers apart from rivals. For instance, Walmart’s Jet.com launched the Uniquely J private brand with intricate, tattoo-like packaging to appeal to urban millennials. Canada’s largest grocer, Loblaw, also made headlines for launching private brand cricket powder as innovative protein.
- Premiumization: Most 2017 private brand growth came from premium ranges, which grew nearly 11% in dollar sales, as consumers seek excellent quality at an affordable price.
- Fresh: Since fruit, vegetables, fish, meat and dairy products are typically commodities, private brands have room to grow. This year Italian supermarket Crai will expand its fresh private brands.
To address these emerging trends and launch innovative private brands faster, companies are using collaborative retail business networks. They also physically meet with experts to share best practices to adapt to the blistering pace of change in global grocery.
Kelly Thompson Kell
North American Market Strategy Director, Trace One
Kelly is a thought leader in the areas of food product development, grocery technology strategy and supplier-retailer collaboration. Her 13 years of internal consulting, strategy engagement, and project leadership within the technology, retail, and CPG industries allow her to bring first-hand experience to the table.
Given her involvement in private label grocery sourcing at Target Corporation and her background as a food scientist and business consultant at Nestle, Kelly sees a strong need to improve communication between grocers and suppliers during the product development process.