Kroger is betting on private-label brands to lower prices and protect margins, a strategy Costco has long used with its Kirkland Signature label. On the chain's second-quarter earnings call, CEO Gregory Foran said Private Selection sales rose more than 14% during the quarter, driven by strong customer response to new products including more ready-to-heat and ready-to-eat meals, and that brand sales across the portfolio grew faster than national brands with penetration up approximately 50 basis points. Kroger also plans to expand SmartWay, its opening price point brand, with more items, broader coverage across the store, and improved visibility in store and online. Data from Numerator cited by Retail Dive shows Kroger's private-label sales in produce, meat, seafood, deli and prepared foods, and in-store bakery rose by about $420 million over the 12-month period ended July 31. The push comes as an August NielsenIQ study found 58% of consumers don't care whether a product is a national brand or private label, 68% view private-label products as a good alternative to national brands, and 69% believe they offer good value for money, while Circana data puts U.S. private-label sales at $330 billion, a 24% unit share and 23% dollar share of the total market.
Kroger CompanyPrivate Selection sales rose over 14% and private-label penetration climbed ~50bp on strong customer response to new products.
Costco Wholesale Corp
NIQ Global Intelligence plc