Albertsons, Dollar General, Wakefern Tap Private-Label to Boost Shopper Loyalty

Retailers from major grocers to discount chains are growing their private-label offerings, courting shopper loyalty.

Grocery giant Albertsons Companies, for its part, announced Thursday (March 16) the relaunch of its Open Nature brand of health-focused foods with 12 new products targeting various dietary needs and wellness trends including dairy-free options and protein powders.

“As we continue to innovate and grow our portfolio, we want to ensure that our customers have diverse options, high-quality products and thoughtfully chosen ingredients at accessible prices,” Brandon Brown, the retailer’s SVP of own brands, said in a press release.

News came the same day that major discount retailer Dollar General said on its earnings call that it is expanding its private-label food options.

“We are increasing private brand offerings across many important categories, including candy and snacks, perishables, pet food and over-the-counter health care products,” CEO Jeffery Owen told analysts. “We believe these products will further differentiate Dollar General in the marketplace as we look to provide our customers with tremendous value on quality products.”

Also announced Thursday, Wakefern Food Corp., the cooperative behind a range of grocery chains in the Northeastern United States including ShopRite, Price Rite Marketplace and others, is investing in its private-label coffee products. Coffee co-packing company NuZee coffee announced that it has made a deal with the grocer to help launch its private-label single-serve products.

“Wakefern is excited to work with NuZee to bring sustainably-packaged, quality products to its Own Brands line of Bowl & Basket single-serve coffees,” Pam Ofri, the co-op’s director of product development and operations, own brands, said in a statement.

By expanding their private-label offerings, offering high-quality, low-priced options that are exclusively available at their stores, these retailers are able to curry favor with the significant share of shoppers open to switching grocery merchants for better deals.

Findings from the most recent edition of PYMNTS’ Consumer Inflation Sentiment study, “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers,” which is based on a February survey of more than 2,100 U.S. consumers, identify a group of grocery shoppers, the “persuadables,” who are somewhat loyal to their favorite merchants but open to better options.

This group, which makes up 39% of consumers, is more brand loyal than the 44% that are always seeking out discounts and special offers but less so than the 17% that stick with their go-to merchants. Overall, two-thirds of consumers surveyed cited prices and discounts as key factors that influenced their decision of where to make their most recent grocery purchase.

“Historically, the reasons why someone may continue to be brand loyal just may not hold anymore because people are being forced due to financial constraints to make tradeoffs that they wouldn’t want to make,” Barbara Connors, vice president of commercial insights at 84.51°, the marketing insights subsidiary of grocery giant Kroger, told PYMNTS in an interview.

Indeed, many consumers are trading down to lower-priced products. Research from the “Consumer Inflation Sentiment: Perception Is Reality,” for which PYMNTS surveyed more than 2,100 consumers in December, reveals that 69% of consumers have made changes to their grocery shopping lists in the last year in response to rising prices. Thirty-five percent have switched to purchasing cheaper, lower-quality groceries.