Why do Millennials love private label groceries so much?
Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.
According to Cadent Consulting Group’s 2018 report, “The Branding of Private Label,” store brand dollar share in grocery is expected to hit a record high of 18.4 percent in 2018 and reach 25 percent over the next decade. One big reason: Millennials.
While the typical shopping cart is 25 percent private label, Millennials’ baskets are 32 percent — and almost half of these consumers plan to purchase somewhat or much more private label in the coming year. With no memory of white-label generics and little loyalty to national brands, “Millennials are driving private label growth,” says Cadent principal Karen Strauss. “They think of it as just another brand,” not a cheap substitute for the real thing. In addition, Millennials are much more likely than, say, Baby Boomers to shop in non-traditional outlets such as natural grocers, deep discounters, club stores and online where store brand sales are expanding.
The top non-traditional private label driver is Aldi, already a year into an ambitious plan to become the nation’s third-largest retailer (based on store count) by 2022. Aldi recently began upgrading its focus on better-for-you, fresh, organic, gourmet and prepared foods.
Several retailers are following Aldi’s lead and refocusing efforts on the perimeter where fresh-obsessed consumers are doing the majority of their shopping nowadays. They’re also raising the private label bar with ethnic, specialty, natural and organic offerings.
Indeed, private labels are increasingly about creating differentiation. In Cadent’s survey, 46 percent of shoppers (and 54 percent of Millennials) said their choice of retailer is influenced by the store brand. Forty-eight percent of shoppers (60 percent of Millennials) said they believe their retailer’s store brand is better than others.
“Private label is also the clearest expression of a retailer’s ‘brand’ and value proposition. If a retailer can’t come up with a compelling private label product, it’s the clearest sign that it doesn’t have a clear, convincing and differentiated strategy and that it doesn’t really know who its super-consumer is,” said growth strategist Eddie Yoon.
DISCUSSION QUESTIONS: Why do you think Millennials are attracted to private label grocery products as much as they are? Will grocers need to promote private labels more like traditional brands to achieve the market share gains forecast in the Cadent research?