- RESEARCH & AWARDS
- CATEGORY REVIEWS
The private label business in the United States continues to accelerate, growing in diversity and focus. While consolidation ever changes the look of the playing
field, U.S. retailers clearly see the strength in promotion and development of their store brands. All projections point to a continually increasing market share for private label—potentially doubling in size by 2017—as retailers bring new products into smart positions to compete with national brands.
It likely comes as no bombshell that, once again, Walmart sits at the top of the retail industry in terms of overall revenue from private label. When your annual retail sales are approaching nearly $450 billion and your flagship store brand, Great Value, provides a significant discount to national brands, the math doesn’t get much easier.
And despite its self-professed desire for consumers to see Walmart as “a brand retailer,” in the words of Charles Holley, executive vice president and CFO earlier this year, the chain hasn’t rested on its laurels when it comes to its private labels. Great Value is always out front at Walmart, and the nice packaging and branding refresh the line saw in 2009 continues now on the R&D side of the fence, with new nutrition-focused products in ongoing development. Walmart has pledged that it will reduce sodium by 25 percent and added sugars by 10 percent in Great Value products, while also removing all industrially produced transfats, by the end of 2015. This will help keep a fresh focus on the line, increasing Great Value’s traction.
Kroger once again comes in at No. 2—again, likely no surprise, as the retailer continues to demonstrate strength, growth and banner diversity, all with a strong, underlying focus on private label. Kroger’s approach to its private label program is all the more poignant when you factor in its significant investment in manufacturing a solid percentage of its own brands. Watch for its hard-discount Ruler banner to expand into new markets in the coming months, adding a competitive edge to the lively discount channel.
Once again rounding out the top three this year is Costco, which also took the No. 3 slot last year. Kirkland Signature continues to form a primary focus for members of this warehouse club retailer. Costco’s revenues from 2011 to 2012 were strong—and continue to gain ground. During fiscal year 2013, Costco’s sales topped $100 billion for the first time, so it’s possible that it might give Kroger a run for its money on our top 35 list next year.
Outside of the top three, the top 35 did see some moves up and down. CVS and Walgreens continue to challenge each other’s position in the marketplace, with private label leading the charge. On the department store front, retailers continue to jockey for position as J. C. Penney experiences ongoing struggles.
Note that for fiscal years 2011 and 2012, Albertsons was part of the SuperValu mix. As of early 2013, that all changed when Cerberus Capital Management acquired the remaining Albertsons stores from SuperValu, along with Jewel-Osco, Acme, Shaw’s and Star Market. Then later this year, Albertsons acquired United Supermarkets, firmly strengthening its position in Texas. As a result of these moves, expect to see Albertsons on this list next year.
Beyond consolidation, the retail industry will continue to feel pressure from online sales—and particularly from Amazon.com, which saw $61.0 billion in 2012 fiscal year revenue, with 27.1 percent growth over 2011. Amazon.com continues to branch into new private label territory with AmazonBasics and Pinzon, and its expanding AmazonFresh service will undoubtedly make waves in the coming year.
A Detailed Look Inside the Top 10
Wal-Mart Stores, Inc.
Estimated 2012 private label sales: $88.8 billion
Banners: Walmart Supercenter, Walmart Discount, Walmart Market, Supermercado de Walmart, Walmart Express
Private Labels: Great Value, Sam’s Choice, World Table, Home Trends, Equate, Marketside`, Mainstays, Ol’ Roy, Special Kitty, Dr. Thunder, Parent’s Choice, White Stag, George, Faded Glory, Oak Leaf, Lucky Duck, No Boundaries, Simply Basic, Better Homes and Gardens, Canopy, Hometrends, your zone, @ the Office, Best Occasions, Clear American, Color Place, Douglas, EverStart, Gold’s Gym, Holiday Time, Kid Connection, ONN, Ozark Trail, Protege, ReliOn, SuperTech, Walmart Family Mobile
Notes: The sheer volume of sales revenue generated by Walmart places it—once again—firmly in the lead when it comes to private label. And while the No. 1 U.S. retailer continues to release new private brands and revamp packaging, Charles Holley, executive vice president and CFO earlier this year said that, “We use private label to fill in gaps where we see there is a value gap for our customers.” He also noted that he continues to see Walmart as “a brand retailer.” Nevertheless, Walmart has invested significant effort into its ongoing revamp of its vital Great Value brand, with an improved look—and improved nutritionals (lower sodium, sugar, fat, etc.) coming down the pike, a move that’s nicely aligned with the prevailing trend of health-and-wellness in private label. So expect to see new health-forward products released under the Great Value brand in the coming months. The retailing giant also took a bold step into “green” territory during 2013 with its announcement of a new Walmart “chemical policy”—stepping above and beyond compliance—vowing to cut down or eliminate 10 “hazardous” or environmentally troublesome chemicals found in common household and beauty products, both in national brands and its own lines.
The Kroger Company
Estimated 2012 private label sales: $33.8 billion
Banners:Kroger, Kroger Marketplace, Fry’s, Fry’s Marketplace, Smith’s, Smith’s Marketplace, King Soopers, King Soopers Marketplace, Dillons, Dillons Marketplace, Fred Meyer, Food 4 Less, Foods Co., City Market, Jay C, Ruler Foods, Pay Less, Owen’s, Scott’s, Gerbes, Baker’s, Price Rite, QFC, Tom Thumb, Quik Stop, Loaf ’N Jug, Turkey Hill, Kwik Shop
Private Labels:Private Selection, Big K, Value, Fresh Selections by Kroger, Simple Truth, Water Quality, Comforts for Baby, Moto Tech, Everyday Living, Wholesome@Home, Home Sense, Office Works, Pet Pride, Quality Guarantee, banner brands
Notes:Private label is the linchpin in the overall—and highly successful—Kroger revenue strategy. The company notes that it stocks upward of 10,000–12,000 private label products in each of its supermarkets. Kroger has also been an early entrant into manufacturing its own private label products, with 36 facilities across the country. This output comprises nearly half of its store brands, with the balance manufactured by outside suppliers to Kroger’s specifications. Kroger’s sales have continued their upswing during 2013, and the company has been active in the ongoing consolidation of the supermarket industry, taking steps to acquire Harris Teeter, along with some Piggly Wiggly locations.
Costco Wholesale Corporation
Estimated 2012 private label sales: $23.2 billion
Banners: Costco, Costco Business Center
Private label: Kirkland Signature
Notes: Earlier this year, when asked if private label was growing at Costco, CFO Richard Galanti noted that it “absolutely was,” that private label share was “in the low 20s and continues to grow.” Kirkland bathroom tissue alone brings in north of $400 million each year. The warehouse club anticipates opening approximately 150 new stores over the next five years, with two-thirds of those planned for locations outside of the United States. A new leading edge for the wholesale club is beauty, with its new Beauty’s Most Wanted program—featuring exclusive brands developed in collaboration with celebrity stylists, makeup artists, etc.—launching this year. And while Costco continues to see impressive growth, it could carve its market penetration even deeper with an intentionally diversified focus that includes value-priced offerings to balance premium goods, a tactic astutely espoused by competitor Sam’s Club.
CVS Caremark Corporation
Estimated 2012 private label sales: $21.4 billion
Private Labels: CVS, Earth Essentials, Just the Basics, Gold Emblem, Total Home, Essence of Beauty, Blade, Nuance Salma Hayek, Bioluxe, Skin Effects by Dr. Jeffrey Dover, Pet Central
Notes: CVS/pharmacy has been climbing the ranks in terms of total revenue and percentage of private label. With the diversified revenue from parent CVS/Caremark (pharmacy services is a major contributor to company revenue and value), which has been experiencing strong growth as a company, expect that to continue. Front-of-store revenues improved by over 5 percent in 2012 over 2011, with just under 20 percent of that growth coming from private label. Recent moves have seen the company revitalize its Gold Emblem private brand and consolidate its household offerings into a new Total Home line. In an interview with PLBuyerearlier this year, Erin Pensa, director of public relations for CVS, said, “Over the next several years, growing and enhancing our store brand offerings continues to be a priority.”
Estimated 2012 private label sales: $15.7 billion
Banner: Walgreens, Duane Reade
Private Labels: Walgreens, Well at Walgreens, Nice!, Good & Delish, Ology, Well Beginnings, Pet Shoppe, Sunny Smile, Finest Nutrition, Studio 35 Beauty. Apt. 5, Apt. 5 Goes Green, Look NY, Prevail
Notes: Moe Alkemade, group vice president of retail brands and global sourcing for Walgreens told PLBuyerearlier this year: “What you’ve seen from us is a tremendous amount of innovation. In both Nice! and Good & Delish, we have really expanded the innovation side of things, and we’re seeing that pay off.” With continued “flagship” store traction and ongoing acquisitions—last year’s mid-South Stephen L. LaFrance Holdings deal, the huge Alliance Boots merger, and recently Kerr Drug—Walgreens has strong momentum moving into 2014 to keep fueling innovation. While total revenue saw a bit of a dip from 2011 to 2012, that statistic is inconsequential. Its stock has been on a major upswing, and ongoing consolidation and streamlining of its pharmaceutical business—the recent deal with AmerisourceBergen helps in that regard—will provide increased capital for ongoing expansion, both domestically and globally.
Estimated 2012 private label sales: $14.6 billion
Banners: Target, SuperTarget, CityTarget, PFresh
Private and exclusive labels: Archer Farms, Market Pantry, Simply Balanced, Threshold, Wine Cube, Sutton & Dodge, up & up, C9, Cherokee, Circo, Gilligan & O’Malley, Merona, Mossimo, RE/Room Essentials, xhiliration, Pixi, Boots & Barkley, Bathery, Giada De Laurentiis for Target, Sonia Kashuk, Nate Berkus Collection, Apotheke M, Umberto Beverly Hills, Chefmate, Liz Lange Maternity, Simply Shabby Chic
Notes: This year, Target has begun the process of replacing its Archer Farms Organic and Archer Farms Simply Balanced products with its new Simply Balanced brand, with dozens of new products released, including various snacks, pasta and pasta sauce, rice and various other grains, fruit snacks, milk and other beverages, butter, frozen and dried fruit, frozen and dried vegetables (yes, dried vegetables), frozen seafood, soup, and breakfast cereals. This line reportedly does not include 105 “common food additive ingredients,” and is largely GMO-free—and will be completely GMO-free by the end of next year. This marks a significant investment in a new brand—and a leading-edge one, at that. Recent projections put non-GMO products, which have a USDA-defined connection to organic foods and an oft-perceived one with natural, at around 30 percent of total food and beverage sales by 2017.
Estimated 2012 private label sales: $11.1 billion
Banner: Sam’s Club
Private Labels: Simply Right, Daily Chef, Artisan Fresh, Bakers & Chefs, Sophyto, Calle Azul, Rue 33
Notes: Wal-Mart Stores, Inc. pops into the top 10 again with its warehouse club business, Sam’s Club. The retailer most recently analyzed and reformatted its private brands in fall 2011. One of the most popular private label items at Sam’s Club is reportedly its dark roast, fair trade Daily Chef Colombian Supremo Coffee K-Cups. The often 50–60 percent discount afforded by the store brands compared to national brands yields a healthy profit margin at Sam’s Club.
Estimated 2012 private label sales: $11.0 billion
Banners: Carrs-Safeway, Dominick’s Finer Foods, Pak’n Save, Safeway Food & Drug, Randalls, Flagship Randalls, Tom Thumb, Flagship Tom Thumb, Simon David, Vons, Pavilions
Private Labels: Open Nature, O Organics, The Snack Artist, Marcela Valladolid, Safeway Kitchens, Safeway Farms, Safeway Select, Primo Taglio, Lucerne, Pantry Essentials, Refreshe, Eating Right, Debi Lilly, waterfront Bistro, Bright Green, In-Kind, Mom to Mom
Notes: Over the last several years, Safeway has cultivated its “Lifestyle” approach to store layout, private label and overall branding. Along those lines, earlier this year Safeway CEO Steven Burd suggested that, over the next decade, they will transform into “a wellness company selling food.” Safeway CMO Diane Dietz noted that this is all about private label branding—and taking the leading edge, and not relying exclusively on an NBE approach: “We are about true innovation versus replication. We actually look at trends. We try to meet our consumers’ needs in a unique way, and we are not about replicating the national brand.” Safeway’s “100 percent natural” Open Nature brand—products that never include 130-plus listed “artificial” ingredients—saw significant growth during 2012, doubling sales and expanding into multiple new categories, currently encompassing nearly 200 products over 36 different categories. O Organics continues to grow, as well, as does value brand Lucerne, which has seen retooling. During 2013, Safeway finally officially launched its Marcela Valladolid store brand, centered on “the real taste of Mexico.”
Estimated 2012 private label sales: $10.0 billion
Private and exclusive labels: Jennifer Lopez, Marc Anthony, Rock & Republic, DesigNation, Simply Vera Wang, Princess Vera Wang, Bobby Flay, Dana Buchman, Mudd, Tony Hawk, Apt. 9, Chaps, Jumping Beans, Sonoma life + style, Candies, Elle, LC Lauren Conrad, Food Network
Notes: Although Kohl’s got its start in the supermarket business (eventually selling to A&P, which subsequently dissolved that business), its chain of department store, dating back to the 1960s, continues to thrive. Although the chain has seen its share of struggles, it finished 2012 strong. Earlier this year, Kohl’s CEO Kevin Mansell noted, “From a brand perspective, 48 percent of our fourth quarter sales were private and exclusive only-at-Kohl’s brands, an increase of approximately 30 basis points over the fourth quarter of 2011.” Part of the reason for this success has resulted from eliminating redundancy between store and exclusive brands. As J. C. Penney continues to struggle, it’s incumbent upon Kohl’s to capture a strong percentage of that business through innovation—while retaining value appeal—in its private and exclusive brands.
Estimated 2012 private label sales: $9.9 billion
Banners: Sears, Sears Grand, Sears Appliance & Hardware, Lands’ End, Kmart, Big Kmart, Kmart SuperCenter, mygofer
Private Labels: Sears, Kenmore, Craftsman, Lands’ End, Roebucks, Thom McAn, Weatherbeater, DieHard, RoadHandler, Muzzler, Galaxy, Toughskins, Canyon River Blues, Bongo, Dream Out Loud, Evolv, Hydro-Glass, Jaclyn Smith, Joe Boxer, Latina Life, Parallel, Personal Identity, Promise Your Love, Simply Love, Protron, Route 66, Alphaline, Attention, Celestial Star, Companion, Covington, Sesame Street, Winnie the Pooh, Structure, Two Hearts, Ty Pennington, Smart Sense, Image Essentials, Little Ones, Essential Home, Sofia by Sofia Vergara , GLO Jeans
Notes: Although Sears is home to some historically robust private brands like Kenmore, Craftsman, DieHard, Toughskins and Lands’ End (after acquisition in 2002), the company has faced significant struggles over the last several years following its merger with Kmart in 2004. During 2012, it closed all of its stores from The Great Indoors banner, and each year sees more Kmart stores closing. Revenue from 2011 to 2012 dropped over 4 percent, and this downward spiral was continuing into 2013. The company’s mygofer concept, which sought to bridge the connection between online and brick-and-mortar retailing, saw a setback in 2013 with the closing of its pilot store in Joliet, Ill. (mygofer continues as an online-only retailer for all Sears Holdings banners, offering home delivery or pick up from local stores). Unless Sears and Kmart can cultivate renewed attention and capture business from troubled J. C. Penney—while revitalizing private label grocery under its Kmart banners—it will likely be chased out of the top 10 next year by close followers Ahold USA, ALDI and Trader Joe’s, grocery chains that are all seeing strong growth.