In Stampede To Store Brands, Aldi, Target, Amazon Win Big

As inflation chomps away at family budgets, people are continuing to switch over to store brands -- and affluent consumers are among this category's biggest fans. And while Walmart continues to dominate the private-label universe with four of the five most popular private labels, Aldi, Target and Amazon are the fastest-gaining.

That marks the seventh consecutive month of gains for store brands as consumers try to manage their grocery bills. The U.S. Labor Department just announced that the inflation rate eased slightly in July, falling to 8.5%, down from 9.1% in June. But the Consumer Price Index is still close to its four-decade high.

The Private Label Manufacturers Association, citing new data from IRI, says private brands jumped 11.6% in dollar sales in July, while national brands rose 5.5%. For the second quarter, private label brands gained 10.9%. Year to date, they’ve increased 9.1%, compared to 5.5% for name brands.



The group also notes growth in every sector, with the most impressive growth in July in liquor, up 27.5%, beverages, up 22.9%, and refrigerated items, up 18.4%. Of the 17 departments it tracks, only one -- tobacco -- declined.

A new report from Numerator, a market research company, adds some demographic surprises. Despite the perception that private-label products appeal most to those cash-strapped households, its share there is lowest.

Those in higher-income households, which Numerator defines as annual household income greater than $80,000, think private-label products are better than others. About 57% of the more-affluent people in its survey say that these products are an excellent or above-average value. Among middle-income shoppers, 55% share that opinion, and just 53% of low-income shoppers. 

How important these sales are to retail brands varies widely. At Aldi, for instance, store brands account for 78% of sales, followed by Trader Joe’s (59%), Wegmans (49%) and Costco (34%). Yet at Publix, they represent only 14% and 15% at Target and Whole Foods.

Walmart owns four of the top five private-label brands. And while Amazon captures a significantly lower-private label share in these sectors, at just 3% among grocery, household, and health and beauty products, it’s among the fastest growing.

The top three gainers? Aldi brands climbed 2.3 points in the second quarter, Numerator says. Target’s Favorite Day label, which features sweet and savory treats, is next, up 2.2 points. And Amazon Basics, up 1.7 points, places third.

Numerator’s findings are based on first-party data from more than 1 million U.S. households.

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