Kroger's (NYSE:KR) private label brands account for 25 percent of the company's sales, excluding gasoline and pharmacy. The all-natural line, Simple Truth, is predicted to generate $1 billion annually.
Following Simple Truth's success in just two years, the supermarket chain rolled out three new lower-priced house brands this summer, reported Cincinnati.com. In total, the private label business is now approaching $20 billion annually.
Now that shoppers are increasingly seeking out bargains, Kroger has put more stock in its private brands, insisting they are not product clones. The Kroger brand is the retailer's No. 1 seller and the Private Selection brand clocks in at No. 6.
Kroger is working to de-stigmatized house brands. This summer it shucked its "Value" label and replaced it with three new, more colorfully labeled substitutes—P$$t, Check This Out and Heritage Farm.
"It's a step further away from generics," Gil Phipps, VP of corporate brands, Kroger, told Cincinnati.com. "It's not just about saving money. [It] gives us a chance to meet specific needs of the customer not being met."
Kroger's private brands have grown by more than 60 percent in the last decade as it became necessary to compete with rivals such as Walmart (NYSE:WMT).
Private labels are becoming more popular among all shoppers, who increasingly compare prices between private labels and national brands before making a selection, according to an ongoing shopper behavior study conducted by The Integer Group and M/A/R/C Research.
However, the real driving force behind private labels are millennials, a group with little disposable income who are unwilling to spend on premium brands.
-See this Cincinnati.com article
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