Private-Label Brands Gain in Popularity as Consumers Prioritize Value

In 2024, the grocery industry saw a dramatic shift as private-label brands — store brands not affiliated with national manufacturers — experienced explosive growth, surpassing national brands in both sales and consumer preference.

While private labels have been associated with low-cost alternatives, their rise has been fueled by a change in consumer perceptions, economic pressure, and creative retail strategies, per a recent Supermarket News report. The forces behind this change are altering the grocery business and establishing a new paradigm for customer loyalty and engagement.

Rise of Private-Label Brands

In an interview with PYMNTS, Shekar Raman, CEO and co-founder of Birdzi, said the rise in private-label brands can be attributed to several factors.

“Major retailers have aggressively expanded their private-label assortments,” Raman said. “Beyond the budget-friendly items shoppers expect, retailers have tapped into premium, organic and specialty segments. At the same time, economic pressures and inflation have pushed shoppers to find creative ways to cut costs, making private-label products an increasingly attractive choice.”

Especially in times of financial strain, consumers are gravitating toward alternatives, as Walmart’s CEO noted recently. Private-label brands can often be a fraction of the cost of national brands, without compromising on quality. Tyler Renaghan, VP of Grocery at Upside, told PYMNTS that in 2024 private-label brands shed their reputation as cheap knockoffs.

Store Brands Go Beyond Savings

“Today’s store brands aren’t just about savings—they’re about quality and value,” Renaghan said. “Inflation primed shoppers to look for alternatives, but what’s keeping them hooked is that they’re getting name-brand quality (sometimes better) for less. Plus, major retailers are making these products easier to find, more enticing to buy, and in some cases, even aspirational — just look at Walmart’s ‘bettergoods’ launch last year.”

Other retail giants like Target and Aldi have revamped their private-label offerings, Renaghan noted, turning them into aspirational, sought-after products.

“Walmart, Target and Aldi have built private labels that shoppers actively seek out, which means customers aren’t just stopping in for a few things — they’re filling their baskets and coming back for more,” he added.

The expansion of private-label options by major retailers also plays a crucial role in building customer loyalty, Raman noted. By offering exclusive products that are only available at certain stores, retailers strengthen their connections with customers.

“Having brands that are exclusively available at the retailer drives great loyalty to the retailer who can deliver deeper value to consumers because there is greater margin in these products,” Raman said. “In categories where brand loyalty is fragmented, retailers have the opportunity to drive private label penetration and capture a greater share of wallet.”

Consumers Choosing Private-Label Brands

This is evident in current consumer trends where shoppers are choosing private labels.

According to the PYMNTS Intelligence report, “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” 36% of shoppers are trading down to less expensive alternatives due to inflation. Additionally, grocery shoppers tend to be more loyal to retailers (53%) than to specific products (35%).

This shift in consumer behavior illustrates the importance of private-label products, Renaghan noted.

“Retailers like Target and Walmart expanding their private-label lines is changing how shoppers think about store brands,” he said. “When retailers nail private labels, they don’t just win a sale — they win a shopper’s routine. Store brands used to be a trade-down choice, but now they’re the destination. That’s a massive shift.”

The Role of Digital Engagement in Building Loyalty

Digital engagement is key to building loyalty, Renaghan said. With the rise of eCommerce, retailers must optimize their online platforms to feature private-label products, using data to create personalized discounts and recommendations.

“Online shopping and personalized promotions are huge for driving loyalty to private labels because they make discovery and savings effortless,” he said. “In today’s world, personalized promos are the new endcap display — shoppers expect brands to know them, from what they buy to what they might try next. A well-placed discount on a private-label staple can nudge a customer into a new habit. And once they’ve made the switch? They might never go back to national brands.”

The future of private-label brands, Raman said, is hyper-personalized, tech-driven and experience-focused.

“Retailers have a treasure trove of data at their fingertips,” he said. “By utilizing technology to organize and segment shopper data, retailers can anticipate shopper needs and provide hyper-personalized offers, recommendations, and experiences. Private-label products are no longer just a cheaper alternative. They are becoming category leaders and a differentiating factor for retailers looking to lock in long-term customer loyalty.”