As a consumer, I’m mixed on private-label brands. I’ll buy Costco’s Kirkland brand for over-the-counter (OTC) medicine, but I’m wary about using any private label when it comes to food.
It’s reasonable to believe that the warehouse club or a grocery chain has copied a workable formula for an OTC painkiller, allergy medicine, or product such as a household cleaner. I’m much more skeptical of any chain’s efforts to knock off big-label food brands.
Yes, you may save some money, but to me, the trade-off generally isn’t worth the risk.
America mostly does not agree with me, according to an August study from NielsenIQ (NIQ).
- 58% of consumers say they don’t care whether a product is a national brand or private label — they simply buy what they need .
- 68% of consumers view private-label products as a good alternative to national brands.
- 69% of consumers believe private-label products offer good value for money.
It’s a change that matches part of Kroger CEO Gregory Foran’s plan for the chain’s turnaround.
Kroger scores with private labels
The NIQ data shows that, at least for some consumers, private labels are not seen as trading down.
“This is one of the most significant shifts happening in consumer goods today,” NIQ E-Commerce President Ramon Melgarejo said. “Consumers are no longer evaluating products primarily based on who makes them. They are evaluating whether a product delivers the right mix of quality, value, convenience, and relevance. That has created a much more democratic and competitive shelf than we’ve seen historically.”
Foran spoke about Kroger’s private-label business during the chain’s second-quarter earnings call.
“Customers are looking for value, but they are not willing to compromise on quality. Our brands answer both, and the momentum shows it,” he said. “…Private selection sales increased more than 14% during the quarter, driven by strong customer response to new products. Including more ready-to-heat and ready-to-eat meals.”
Costco has long been a leader in private labels with its Kirkland Signature brand.
“At a time when grocers are pouring money into private brands, Kirkland Signature shows the heights to which a store brand can soar. It accounts for around $86 billion in annual sales, or around a third of Costco’s total haul,” according to a Wall Street Journal story.
Costco has opted to group all of its private-label options under the Kirkland Signature label.
“Around 600 products globally carry the Kirkland Signature label in categories ranging from batteries to pet food to wine to bath tissue. And some of its best sellers — including eggs, bottled water and butter, according to a recent story in Costco Connection, Costco’s in-house magazine — are the same products grocers rely on to drive trips,” Grocery Dive reported.
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Kroger plans more private-label investments
Data from Numerator backs up Foran’s points.
Kroger’s private-label sales in the produce, meat, seafood, deli and prepared foods, and in-store bakery categories were up by about $420 million over the 12-month period that ended July 31, Retail Dive reported.
Foran shared more information on Kroger’s private-label efforts.
“Across the portfolio, our brand sales grew faster than national brands. And penetration increased approximately 50 basis points,” he said.
He also made it clear that the company plans to invest in lower-cost, private-label options.
“Looking ahead, we are also expanding SmartWay, our opening price point brand, with more items, broader coverage across the store, and improved visibility both in store and online,” he added.
Private labels are growing
RTM Nexus CEO Dominick Miserandino thinks that Kroger is simply doing what it has to do.
“Private label isn’t rocket science — it’s just Kroger protecting its margins,” he told TheStreet.
It’s a way to deliver value, while also making money, he added.
“Standard grocery margins are practically nonexistent, hovering around 1% or 2%. When big brands jack up their prices, Kroger gets squeezed. Selling their own store brands cuts out the middleman, so they actually make a decent profit on the shelf while offering lower prices to shoppers,” Miserandino shared.
In the United States, private-label sales reached $330 billion, capturing a 24% unit share and a 23% dollar share of the total market, according to data from Circana.
“As we look ahead to 2026, the outlook for private label remains positive, though more balanced,” said Circana Chief Advisor Sally Lyons Wyatt. “While we anticipate continued unit share growth, the pace will likely be more measured as private label transitions from an acceleration phase into a normalized growth cycle.”
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