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CPG

How Retailers Are Remaining Competitive in Private Label

A study found grocers are using the category to ensure profitability
Photograph courtesy of H-E-B

Retailers are increasingly looking at private label as a way to ensure sustained profitability as the CPG space suffers from increased competition.

As such, nine out of 10 leading retailers price their private label products lower than the average for their respective categories, according to a study from DataWeave, in partnership with SunTrust Robinson Humphrey.

Karthik Bettadapura, co-founder and CEO of DataWeave, says retailers are “doubling down” on private label to “capture valuable additional margin,” pointing to the efforts of retailers such as Kroger, Walmart and Amazon Fresh. These retailers, said Bettadapura, have a higher degree of private label penetration than other retailers analyzed in the study.

The ingredients for a stronger private label portfolio, according to the report, include a wider product assortment, which Kroger and H-E-B lead the way in, while Albertsons, Walmart and Amazon Fresh have the highest focus on local assortments. Additionally, home, beauty and personal care items lead the distribution of private label products across all retailers.

Youssef Squali, global head of internet and media equity research for SunTrust Robinson Humphrey, said he believes the findings emphasize how the customer experience is emerging as a “stronger force over the past few years, with it informing almost every decision about pricing, product assortment, promotions and private label investments.”

“These dynamics will continue to be vital in driving profitable growth as online commerce in CPG scales aggressively in the near future,” he predicted.

The report tracked and analyzed 450,000 products across 10 leading retailers and 10 ZIP codes each.

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