Retailers Work To Expand Private Label Assortments, FMI Says
With higher prices leading more consumers to purchase private label products, retailers are looking to expand the average dollar share of store branded products over the next two years.
The second installment of 2022 Power of Private Brands from FMI–The Food Industry Association revealed that retailers are looking to boost the average dollar share of store branded products from 18.2% to 22.6%.
“As the food industry looks toward the future for private brands, they are setting bold targets based on high demand from consumers, “said Doug Baker, vice president of Industry Relations with FMI. “To reach these goals, retailers and manufacturers are looking at several tactics including private brands outside the U.S. that have higher shares for approaches to growth, including innovation, strategies to accelerate growth and enhanced e-commerce availability for private brands.”
In the FMI survey, 81% of food retailers and manufacturers surveyed report innovation as the top strategy for achieving higher private brands market share. Specifically, industry respondents see potential for private brands premium products (69%), product options with simple ingredient lists (60%), products offering strong price/value in a category (56%), and prepared meal solutions (42%).
As retailers and manufacturers work to accelerate private brands growth, 71% plan on working with suppliers to optimize price and availability, which aligns with consumers mostly choosing private brands because of lower costs, deals or perception of good value. Other top acceleration strategies mentioned include improving consumer insights and trends intelligence (64%), launching new products (64%) and improving packaging (58%).
Currently, retailers report 60% of their private brands assortment is available on their e-commerce platform, so expanding availability is a key strategy for growth. Retailers and suppliers mentioned several other improvements for private brands e-commerce such as search functionality prioritizing private brands offerings (80%), providing compelling product images (73%), tagging attributes in search, such as health and well-being and sustainability (65%) and utilizing suggestive selling in search results (53%)