Report: Retailers getting solid results from private label investments
Over the past five years, a whopping 81% of grocers recorded increased private label sales with 42% reporting a major increase in sales, according to the “2019 Grocery Tech Trends Study” by RIS and Progressive Grocer, two sister brands of Store Brands.
Subtitled the “Race for Competitive Advantage,” findings in the fourth-annual report of the grocery industry uncover tectonic shifts in digital strategy and analyze 66 individual technologies that grocers can benchmark against. The study draws data primarily from regional and national chains, including supermarkets, traditional grocers, club stores, convenience stores, dollar stores, specialty foods outlets and others.
The data is broken out according to where grocers are spending tech dollars today,
where they will spend tomorrow (2020), and where they are planning to spend in the future (2021). Data was collected last April from 60 respondents that hold executive positions within their companies that gives them significant influence on technology strategy, project selection and budgets.
Thanks to the surge in private label sales, such high-margin products now account for 29% of sales across the grocery segment, according to the study. "In-house brands give shoppers appealing options to name brand products while simultaneously increasing the grocer’s bottom line,” the study’s authors said.
In its “recommendations” segment, the authors advised grocers to invest in private label development to differentiate from competitors and to match the growing industry trend over the past five years.
The report also found that grocers are upping the ante in technology spending because of increasingly fierce competitive demands and the rise of omnichannel shopping. Eighty percent of those surveyed said they will increase tech spending year-over-year and of these 40% plan to increase tech budgets by 5% or more.
“Successful grocers today with healthy balance sheets will be able to compete on price
and make investments in technologies that are harder to match for those who are less
financially healthy,” the report stated.