Store brands outpace national brands, growing more than 40% over 5 years

Store brands are proving to be a powerful weapon for mass merchandisers, club stores and dollar stores as they compete against both Amazon and other brick and mortar retailers.

An analysis of the latest Nielsen data (United States) 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 show 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 advanced to 19.3% in 2018, up from 15.5% in 2013.

Moreover, this impressive growth for private label shows no sign of slowing. In 2018, private label dollar sales advanced +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 unit volume was up +6.4%. Total sales in the mass channel has reached $314 billion vs. $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 Warren Buffett, a big investor in Kraft Heinz. In a recent interview with CNBC, 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 was 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.