Major Retailers Boost Private-Label Sales

With low prices and high-quality items through private labels, retailers like Target and Costco are increasing sales of their own items quicker than those of iconic American names. Sales of the 20 largest brands notched a 1.2 percent increase in the final three months of last year in toiletries, food and drink and other consumer goods, while private-label brands in the same categories saw a 4.3 percent increase in U.S. stores per Nielsen, the Financial Times reported.

Nomad Foods Chief Executive Stefan Descheemaeker said, according to the paper, “You have to deliver something that is superior.” Descheemaeker continued, “If you don’t, then at some stage the question arises: why do you need brands?” And, amid earnings reports, executives at large retailers in the U.S. detailed how they were bolstering their own brands.

Walmart, for instance, has been building up its private-label lineup. In the past year, additions to its mix have encompassed mattress and bedding label Allswell, and its Winemakers Selection. At the same time, Kroger has said that it unveiled 1,022 of its own brand products last year.

The news comes after it was reported in June that SunTrust Robinson Humphrey was projecting that the private label business of Amazon could see revenues of $25 billion by 2022. At the time, SunTrust Analyst Youssef Squali said the venture could send shares up more than 21 percent over the next year. He increased his price target from $1,900 to $2,000 a share as a result.

Squali wrote in a June note, “As strong an eCommerce platform as Amazon has become over the last 20 years, we believe that the best has yet to come.” Squali continued, “Private label is one of the highly under appreciated trends within Amazon, in our view, which over time should give the company a strong … competitive advantage.”

The eCommerce retailer’s own private labels are the fourth most purchased brand when it comes to clothing and footwear on Amazon,“with only Nike, Under Armour and Hanes ranking higher,” Squali wrote at the time.