In the midst of the Great Recession during 2008, grocery penetration of private-label products increased more than it did in any other single year in U.S. history. Since then, however, penetration has stagnated, leading some industry watchers to declare that private label is at the end of its runway.
However, there are a number of compelling reasons that lead L.E.K. Consulting to believe the next wave of private-label growth actually might be right on the horizon:
- Private-label penetration rates in Europe are much higher than in the U.S.
- Increasing evidence suggests American consumers’ preference for established brands is waning
- Two successful German discounters: Aldi and Lidl are looking to expand into the U.S. market
Some organizations are already ahead of the curve, as demonstrated by Kroger’s approximately $1.5 billion Simple Truth line. Well-informed industry participants should be planning now to get ahead of the next wave before it arrives.
This Executive Insights takes a closer look at the significant opportunities for retailers, private-label manufacturers and branded consumer packaged goods companies seeking to catch the next wave of growth in private-label products.