This guest post comes from Kelly Thompson Kell, North American Market Strategy Director for Trace One.
Although Amazon and Walmart have invested in private brands, grocery retailers’ brands continue to dominate food and beverage sales.
Amazon has 119 private brands yet they represent mostly non-food categories, as less than 2% of total products are grocery items. Since Amazon’s acquisition of Whole Foods in 2017, Amazon still strives to shed the “Whole Paycheck” reputation and struggles to achieve consistent private brand success.
Meanwhile, Walmart-owned Jet.com launched the Uniquely J private brand to woo Millennials. Despite deep discounts, Jet.com saw a 39% decrease in online sales revenue on Cyber Monday compared to 2017. As retail giants struggle in grocery private brands, grocery retailers can win with their strengths. Innovative private brands can help grocery retailers deliver the variety consumers crave, as 69% of consumers said it’s important to have a good assortment of private brands.
Notably, grocers have adapted to consumer demand for fresh, organic, natural, vegan, free-from, and local products, and reformulated their recipes to contain less sugar, salt, and fat.
Their expertise is apparent. In 2018, Kroger’s private brand Simple Truth surpassed $2 billion in annual sales, making it the largest natural and organic brand in the U.S, and Kroger’s private brand sales grew 40% in six years. Trader Joe’s remains the most popular supermarket chain in America in part for its unique private brands. Private brands account for 90% of Aldi’s assortment, and the company won more than 200 awards for its private brand excellence.
To delight consumers, grocers can apply their deep expertise to develop innovative, exclusive private brands that boost sales and build loyalty. To stay ahead of consumer trends, global grocery retailers are using data insights to strengthen their current assortments and they attend industry events to find partners for private brand collaboration.
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.