The Supply Side: Numerator reports Walmart is No.1 in private-label market share

Rising prices are pushing consumers to private-label products for food, consumables and general goods, according to a report from Numerator, a data and tech company serving the market research space. According to the report, nearly 40% of high-income and middle-income shoppers purchase private-label items.

Numerator also found that Walmart owns four of the top five private brands. Ranked by household penetration, Numerator reports the top five private brands to include Walmart’s Great Value, purchased by 72.7% of the U.S. population; Equate, which has a 52% market share; Marketside at 44.2%; and Fresh Guaranteed at 40% market penetration. Dollar Tree ranked fifth for its private brand market share at 32.5%.

While Walmart holds a significant lead over its competitors with private brand market share, Numerator found Aldi, Target and Amazon are gaining ground with their private brand reach. In 2020, Amazon had grown its private brand business to include 45 different labels offering 243,000 items across a wide range of categories, such as AmazonBasics apparel, which the company launched in 2005.

In mid-July, Amazon announced plans to reduce the number of private brands it sells because of weak sales. Analysts said Amazon has been evaluating its private brand sales over the past year under the leadership of new CEO Dave Clark. Amazon is expected to reduce the scale of its private brands by as much as 50% in its U.S. business.

“We continue to invest in this area, just as our many retail competitors have done for decades and continue to do today,” Amazon stated.

Numerator reports AmazonBasics saw its market share grow 1.7% in the second quarter of this year. While Amazon captures a higher private label share among its consumer electronics and home goods products, the retailer posts a private label share of only 3% among grocery, household, and health and beauty products.

Target’s private-label market share for grocery, household, health and beauty is 15.1%, Whole Foods Market is 14.7%, and Publix is 13.6%. That compares to more than 60% for Walmart’s market share in those categories. Numerator reports Target’s Favorite Day brand market share increased 2.2% in the second quarter, second only to Aldi’s 2.3% market share growth in the same period, Numerator reports.

MEMBER’S MARK GAINS
Sam’s Club reduced the number of its private brands in recent years and worked to grow the market share of its Member’s Mark brand. Numerator said Member Mark’s market share rose 1.3% in the second quarter. Member’s Mark represents 30% of total sales at Sam’s Club, equal to $22.08 billion. Sam’s Club has also worked to make its Member’s Mark brand more attractive to consumers, according to Sam’s Club CEO Kath McLay. During the retailer’s shareholder events in June, she told the media that Member’s Mark aspires to be brand customers “must have” because they trust the quality and value.

Since 2017, Sam’s has grown the value of its Member’s Mark by more than 100%, and it remains the top preferred brand on SamsClub.com, the company said. Company leadership said the successful growth of Member’s Mark is more than added sales. It’s also about creating a solid asset and loyalty base for the retailer’s overall business.

Sam’s said it is evaluating the Member’s Mark assortment and adhering to and developing high standards for every new item. McLay said that the item is either improved or abandoned if members are not impressed.

Costco is at the top of the list among retailers that have somewhat perfected private brands. Its iconic brand Kirkland represents 33.5% of Costco’s sales, and the brand is worth more than $75 billion.

Scott Benedict, a former buyer for Sam’s Club and now executive at Rogers marketing agency WhyteSpyder said a strong private brand could be a real differentiator. Benedict applauds the work Sam’s Club has done with its Member’s Mark brand, which excelled early in consumable items but has recently made a name for itself in higher-margin general merchandise and apparel. He said the Kirkland Signature brand is an example of that for Costco. Amazon has also made headway with the AmazonBasics brand, now the best seller on Amazon.com.

CONSUMER SENTIMENT
While many retailers have invested in private brands in recent years, Aldi sits at the top for the share of private brand sales relative to all sales at 77.5%. Numerator said 82.6% of items sold during the second quarter at Aldi were private brands. According to Numerator, Aldi’s parent company, Trader Joe’s, is also a private brand destination, with 59.4% of sales being from the 56.9% of house brands it offers.

Wegmans was third for its share of market share spend in the second quarter at 49.4%. Roughly half of the units sold at Wegmans in the period were private brands. Costco and Sam’s Club ranked fourth and fifth with a 33.5% and 30% share of spend, respectively, in the second quarter.

Texas-based grocery giant H-E-B was sixth with private brands being 26.9% share of spend in the quarter. About one in every three items sold at H-E-B in the second quarter was a private brand. Walmart has similar results as the seventh largest share of private brands spend at 23.3%. Numerator said that every 23 out of 100 items Walmart sold in the second quarter was a private brand.

There has been an uptick in recent months among consumers who say the price is more important than the brand name, particularly among low-income consumers. Overall sentiment regarding private labels’ value for money has stayed relatively consistent over the past couple of years, with over half of consumers (55%) rating its value for money excellent or above average, Numerator noted in the report.

The report found that 38% of consumers said they purchase private brands to save money, 32% of those were from low-income households, and 40% were from middle-income families. Roughly 30% of low-income households and 27% of middle-income households said private brand quality has improved over time.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.