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Store brands growth far outpaces that of national brands

Private-label dollar volume in the mass retail channel has surged 41% over the last five years, compared to a gain of only 7.4% for national brands.

The impressive growth of the private-label market shows no signs of slowing.
The impressive growth of the private-label market shows no signs of slowing.

Store brands are proving to be a powerful weapon for mass merchandisers, club stores, and dollar stores as they compete against other brick-and-mortar retailers and against Amazon. An analysis of the latest Nielsen data reveals that private-label dollar volume in the mass retail channel surged 41% over the last five years, compared to a gain of only 7.4% for national brands.

The growth lead is even more pronounced when it comes to units. The same Nielsen data shows that store brands volume climbed by 33.2%, while the national brands inched ahead by less than 1%. The gains in dollar and unit sales are generating significant market share increases for retailer brands in the mass channel as a result. Unit market share climbed to 23.2% in 2018, up from 18.5% in 2013. Meanwhile dollar market share increased to 19.3% in 2018, up from 15.5% in 2013.

And, Nielsen reports, this impressive growth for private label shows no sign of slowing. In 2018, private-label dollar sales increased 9.8%, and unit volume gained 10.6%. In contrast, national brands were flat in dollar volume and gave up -1.3% in units. This trend is especially significant since the mass channel is also growing faster than traditional supermarkets. Over the past five years, dollar volume for the mass channel has climbed 12.6%, while the unit volume was up 6.4%. Total sales in the mass channel have reached $314 billion versus $330 billion in supermarkets.

The success of store brands in the mass channel is posing a big challenge for national brands—a challenge that was clearly spelled out by Kraft Heinz investor Warren Buffett in a recent interview with CNBC. In the interview, he said the marketing colossus of well-known national brands had 2018 sales of only $26 billion compared with the $39 billion in sales posted by Kirkland, the private label of Costco, the leading warehouse club.

Private label’s performance in the mass channel for 2018 nudged Nielsen’s store brands figures to positive territory across all outlets combined, despite a lackluster showing for the year in supermarkets and drug stores. For total outlets, dollar sales for store brands were up 1.7%, and unit volume was up 0.4%. Correspondingly, store brands dollar market share in all outlets gained half a point, up to 18.5%, while unit share increased 0.6 points to 22.3%.

During 2018, store brands sales across all outlets measured by Nielsen came in at $128.6 billion, up from $123.1 billion, while units moved up to 46.2 billion from 44.8 billion.

The data was compiled by Nielsen for 104 weeks ending Dec. 22, 2018, compared to 104 weeks ending Dec. 26, 2015.

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