As grocers compete to take advantage of consumers’ inflation-driven shift to home dining, many are finding that their private-label offerings are the best tool at their disposal.
For instance, Ahold Delhaize-owned, Maryland-based grocery chain Giant Food, which spans 164 stores in Delaware, Maryland and Virginia, announced Monday (Oct. 3) a new in-loyalty-program promotion to drive private-label sales.
The grocer is enabling program members to redeem rewards on many popular own-brand staples at lower point thresholds than other items require. These items include bread, milk and vegetables, among others.
“Delivering value to our customers is one of our highest priorities at Giant and this new promotion program within Flexible Rewards is one way we can offer customers more savings on the products they purchase regularly,” said Giant Director of Loyalty Ryan Draude in a statement. “We are thrilled to be serving over 1 million Flexible Rewards members and look forward to continuing to deliver competitive value offerings to our loyal customers.”
Private-label lines offer grocers the threefold benefits of low consumer price tags to appeal to cost-conscious shoppers, higher margins for the grocers, and uniqueness to their stores to drive loyalty. Certainly, many grocers have been noting the opportunity to reap these advantages in this inflationary environment.
Kroger noted in an earnings call last month that its “Our Brands” segment grew more than 10% and added more than 170 items in the quarter. Also in September, the grocer announced the launch of a new, lower-priced line of products, Smart Way, including an initial 150 products with more to come in the months ahead. Additionally, Target and Walmart have also noted growth in their private-label product portfolios, among other grocery retailers.
Read more: Kroger Gives Inflation-Weary Customers What They Want With New Product Line
For Ahold Delhaize USA’s part, rather than implementing promotions and pricing actions across all brands, the grocer’s supermarket chains are each taking their own approach. On an earnings call in August, Ahold Delhaize CEO Frans Muller noted that, while the grocer has seen private-label growth across international markets, growth in the United States has actually been somewhat slower than in other regions.
Meanwhile, as grocers look to push private-label growth, a range of leading food and beverage name brands have been looking to combat this shift by expanding their offerings in the entry-level price point. These moves come as consumers increasingly choose low prices over high quality.
See more: Food and Beverage Brands Push Back on Shift to Private Label
As Grocers Push Private Labels, Brands Seek Loyalty Online
“One of the things we’re actually looking at is how we actually allow consumers to stay in iconic brands,” Kraft Heinz CEO Miguel Patricio told analysts on a call in July. “And it’s because of the number of ranges of products across our pricing ladder.”
Research from PYMNTS’ study “Consumer Inflation Sentiment: Inflation Slowly Ebbs, but Consumer Outlook Remains Gloomy,” which drew from an August survey of 2,169 consumers, found that 37% have reduced the quality of the items that they are buying to manage their spending in response to rising prices.
Read more: New Survey Shows Consumers Less Optimistic Than Fed on Taming Inflation
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