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Report: Healthy, Ethnic Private Label Foods Drive Walmart, Target Sales

March 29, 2013

A new report from market research publisher Packaged Facts says that supercenters are being viewed as viable alternatives to supermarkets for food purchases.

The report, “The Supercenter Grocery Shopper: U.S. Consumer Patterns at Walmart, Target, Meijer and Fred Meyer,” says that 60 percent of Americans shop for groceries at a supercenter, including 57 percent of adults who shop at either Walmart or SuperTarget, and 37 percent who shop at both.

“National and regional supercenters alike have upped the ante in terms of the breadth of private label products offered, the type of product information displayed on packaging, and the level of premiumization of these products,” said David Sprinkle, publisher of Packaged Facts, in a news release announcing the report.

However, the report showed that consumers still wanted value in their private label products, even as the quality and premium feel increased.

“It's clear that price, in addition to quality, is a driving force behind both where people shop and what they purchase,” the report said. “Almost 60 percent of Walmart shoppers say they always look out for special offers. And despite being the preferred supercenter for more affluent consumers, Target shoppers are among the most likely to be swayed by coupons to try new food products, and aren't afraid to look for clearance items.”

The report also had praise for the program at Fred Meyer, one of the Kroger banners. It said the association with Kroger may help adoption of private label at its stores.

“Customers who shop at Fred Meyer are much more likely to purchase a wide range of private label food products across a variety of categories, especially meats, baking products, dairy products and frozen foods,” the report said.

The report shows that about 60 percent of customers who buy private label food and beverages shop at Walmart.

“The supercenter's recognizable Great Value brand is a hit with consumers, especially those seeking alternatives to national offerings in the dairy, frozen food, meat, and snack/dessert segments,” the report said.

It cited Walmart’s mission to provide healthier food choices as connecting with customers. It also cited PLBuyer’s exclusive story on Walmart’s new packaging for its Great Value line as evidence of the line’s status with consumers.

As for Target, the report said the expansion of its Archer Farms line into premium international products, “has made it even more popular with several highly influential grocery shopper segments: Latinos, Asians, and Foodies.”

It added that Archer Farms’ certified organic standards on many products made them more appealing to health-conscious consumers.

“With the right marketing, these organic products could even be used to bring more foot traffic to the store among the fiscally potent baby boomer and senior consumer segments – both of which are underrepresented at Target and SuperTarget supercenters,” the report said. “There’s reason to think that a greater emphasis on the health halo associated with certain Archer Farms products could lure a few older adults to SuperTarget.”

Meijer was recognized in the report as a “little giant” in the sector, with a “respectable – and respected – line of at least six private label brands that are each positioned to appeal to specific consumer needs.”

On the beverage side, the report said Walmart had shown much success with its Sam’s Choice private label line, but that all four retailers made strong gains in private label share in the category.

“Meijer shoppers are the most likely to say they purchase private label beverages,” the report said. “More than half of consumers at Walmart, Meijer, and Fred Meyer say they buy these products, and 48.8 percent of SuperTarget shoppers claim the same.”

Using data from an Experian Simmons National Consumer Study in the spring of 2012, the report showed consumer buying preferences for private label products across seven high-level categories.

Among the big findings – 95.7 percent of the 217 million shoppers in the U.S. said they bought private label food or drink products in supercenters or grocery stores.

Among baking products, 30.6 percent of consumers buy private label, according to the report. Fred Meyer trends well above the average, with Walmart also markedly higher.

Among condiments, 61.9 percent buy private label, with Fred Meyer, Walmart and Meijer all above trend levels.

Adoption in dairy products reached 63.4 percent, with all four retailers above trend levels, led by Fred Meyer and Meijer.

In frozen foods, 51.5 percent of consumers buy private label, with Fred Meyer leading all four retailers above trend levels. For meat products, adoption is at 41.9 percent for private label, with Fred Meyer seeing 60.6 percent penetration at its stores. Meijer also is well above trend levels.

In snacks and desserts, 58.5 percent of consumers buy private label, with 73.3 percent of Meijer shoppers buying them, leading all four retailers above trend levels.

As for general food products, 88.1 percent of shoppers buy private label, with Fred Meijer, Meijer and Walmart all slightly above trend.

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