Sept. 13, 2010
Global retail consultant Planet Retail has just put out some eye-opening insights regarding the future of private label groceries. According to Planet Retail’s first-ever "Private Labeling in North America: Fertile Ground for Growth" report, private label sales at the Top 30 grocers including Walmart, Kroger and Aldi are set to increase 40 percent to $209 billion by 2014, accounting for 24.1 percent of total grocery sales.
Though the firm doesn’t track the breakdown of private label products, pizza is a huge player in this category. An Information Resources report release last year said store-brand frozen pizza sales increased 23 percent in the year ended November 29. Also last fall, Donatos exemplified the industry’s new awareness of this growing niche. It spawned a Jane’s Dough Foods division to develop private label pizzas for grocers such as Kroger, one of the premier companies for private label growth.
For those pizza chains looking to follow the path of developing pizza for the biggest grocers, Planet Retail offers a handy breakdown of top retailers for the growth category. Dominating the top position in Planet Retail’s rankings is Walmart, whose private label grocery business is larger than Kroger and Costco’s private label sales combined. While it’s no surprise that Walmart tends to dominate most categories, in grocery it has traditionally been the national brands that featured heavily on Walmart’s shelves.
“The relaunch of Great Value combined with the effects of its SKU rationalisation programme has led to improved visibility of private label, resulting in an increase in category sales. In the US, the Great Value line alone generates $12.5 billion in sales,” Planet Retail’s global research director Natalie Berg said. “We expect this to increase 60% by 2014, making it a $20 billion brand.”
Another key player in the ranking is Aldi, which although placed 19th in terms of overall sales, holds the prestigious third place in terms of private label sales. The retailer includes the Aldi and Trader Joe’s banners, and places a much stronger emphasis on private label than its peers, leaving national brands to make up just 15 percent of sales. As a result of aggressive expansion plans, Planet Retail predicts that by 2014 Aldi will generate $15 billion in private label sales, approximately the size of H-E-B’s entire business today.