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Impact of Private Label in the Online Food and Drink Market - US - February 2019

"Private label share of food and beverage sales at traditional store-based retailers has made solid gains in the past couple of years, driven by retailers’ efforts to strengthen their store brands, but hasn’t moved dramatically over the past five. The continued shift to more online grocery shopping, however, has the potential to disrupt the relatively stable relationship between name brands, retailers, and private label, creating opportunities for retailers that offer shoppers value for their money and a simplified shopping process."
- John Owen, Senior Food & Drink Analyst

This Report looks at the following areas:

  • Most food and beverage shopping still happens in-store
  • Online shoppers less likely to be motivated by price
  • Most frequent online shoppers least likely to purchase store brands
  • Online grocery shoppers a little more likely to stick with name brands
  • Online shoppers’ positive views of store brands point to further gains
  • Online shoppers open to a range of store-brand concepts and tactics

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • Most food and beverage shopping still happens in-store
            • Figure 1: Approach to food and beverage shopping, by age, December 2018
          • Online shoppers less likely to be motivated by price
            • Figure 2: Food shopping priorities, by shopping approach, December 2018
          • Most frequent online shoppers least likely to purchase store brands
            • Figure 3: Purchase of private label by category, by shopping approach, December 2018
          • Online grocery shoppers a little more likely to stick with name brands
            • Figure 4: Store brand shopping behaviors, by in-store vs online, December 2018
          • Online shoppers’ positive views of store brands point to further gains
            • Figure 5: Attitudes toward store brands, by shopping approach, December 2018
          • Online shoppers open to a range of store-brand concepts and tactics
            • Figure 6: Factors to encourage private label purchase, by shopping approach, December 2018
          • What it means
          • The Market – What You Need to Know

            • Private label share growth accelerates in traditional retail channels
              • Broader ecommerce trends impact grocery sector
                • Millennials take on more grocery shopping responsibility
                  • Americans are trying to eat healthier
                  • Market Perspective

                    • Private label share growth accelerates in traditional retail channels
                      • Figure 7: Private label share of multi-outlet food and drink sales, 2013-18
                    • Walmart’s store-brand success in-store could translate to ecommerce
                    • Market Factors

                      • Broader ecommerce trends impact grocery sector
                        • Millennials take on more grocery shopping responsibility
                          • Households with children on the decline
                            • Most consumers report making an effort to eat healthy
                              • Figure 8: Approaches to healthy eating, May 2018
                            • Young adults far more likely to see barriers to healthy eating
                              • Figure 9: Barriers to healthy eating, by gender and age, May 2018
                          • Key Players – What You Need to Know

                            • Traditional retailers with strong store brands invest in ecommerce
                              • Amazon trails in grocery private label but is looking to expand
                                • Beyond value: leveraging store brands to meet more diverse shopper needs
                                • What’s Happening?

                                  • Traditional retailers with strong store brands invest in ecommerce
                                    • Private label an important part of Kroger’s ecommerce initiatives
                                      • Leveraging Kroger’s direct marketing expertise
                                        • Figure 10: Kroger grocery delivery promotional email, January 2019
                                        • Figure 11: Kroger Simple Truth private label promotional email, January 2019
                                      • Walmart leverages strong store brands as it expands pickup and delivery
                                        • Figure 12: Walmart Grocery Pickup promotional email featuring private label products, January 2019
                                      • Amazon trails in grocery private label but is looking to expand
                                        • Figure 13: Amazon Solimo promotional email, June 2018
                                      • Beyond private label: Amazon invites brand exclusives
                                        • Private label leader Trader Joe’s walks away from delivery
                                        • What’s Next?

                                          • Beyond value: leveraging store brands to meet more diverse shopper needs
                                            • Brandless strips away brand comparisons in favor of attribute-based shopping
                                                • Figure 14: Attribute perceptions of Brandless cookies vs cookie category, 2018-19
                                            • The Consumer – What You Need to Know

                                              • Most food and beverage shopping still happens in-store
                                                • Online shoppers less likely to be motivated by price
                                                  • Most frequent online shoppers least likely to purchase store brands
                                                    • Online grocery shoppers a little more likely to stick with name brands
                                                      • Online shoppers’ positive views of store brands point to further gains
                                                        • Online shoppers open to a range of store-brand concepts and tactics
                                                        • Online Food and Beverage Shopping Overview

                                                          • Most food and beverage shopping still happens in-store
                                                            • Figure 15: Approach to food and beverage shopping, December 2018
                                                          • Younger adults more likely to shop for food and beverages online
                                                            • Figure 16: Approach to food and beverage shopping, by age, December 2018
                                                          • Nearly half of in-store shoppers express interest in online shopping
                                                            • Figure 17: Interest in online food and beverage shopping among in-store shoppers, December 2018
                                                          • Food shoppers motivated by a wide range of priorities
                                                            • Figure 18: Food shopping priorities, December 2018
                                                          • Online shoppers less likely to be motivated by price
                                                            • Figure 19: Food shopping priorities, by shopping approach, December 2018
                                                          • Smart phones increasingly dominant in online grocery shopping
                                                            • Figure 20: Devices used for online food and beverage shopping, December 2018
                                                        • Private Label Purchase by Category

                                                          • Most frequent online shoppers least likely to purchase store brands
                                                            • Figure 21: Purchase of private label by category, by shopping approach, December 2018
                                                          • Younger shoppers more inclined to purchase store brands overall
                                                            • Figure 22: Purchase of private label by category, by age, December 2018
                                                        • Private Label Purchase Locations

                                                          • Walmart’s strength in private label in-store extends to online
                                                            • Figure 23: Online retailers for private label purchasing, December 2018
                                                          • Traditional supermarkets still hold the edge in-store
                                                            • Figure 24: In-store retailers for private label purchasing, December 2018
                                                        • Retailer Perceptions (Correspondence Analysis)

                                                          • Methodology
                                                            • Retailers bring distinctly different perceptions to their private labels
                                                                • Figure 25: Correspondence analysis – Retailer perceptions, December 2018
                                                                • Figure 26: Retailer perceptions, December 2018
                                                            • Private Label Shopping Behaviors – Online vs In-store

                                                              • Online grocery shoppers a little more likely to stick with name brands
                                                                • Figure 27: Store brand shopping behaviors in-store vs online, December 2018
                                                              • Younger online shoppers’ brand preferences less established
                                                                • Figure 28: Store brand shopping behaviors online, by age, December 2018
                                                                • Figure 29: Store brand shopping behaviors in-store, by age, December 2018
                                                            • Private Label Shopping Attitudes

                                                              • Online shoppers’ positive views of store brands point to further gains
                                                                • Sampling could be a key tactic both online and in-store
                                                                  • Figure 30: Attitudes toward store brands, by shopping approach, December 2018
                                                              • Factors to Encourage Private Label Purchase

                                                                • Online shoppers open to a range of store-brand concepts and tactics
                                                                  • Distinctive store brands could motivate more online grocery shopping
                                                                    • Figure 31: Factors to encourage private label purchase, by shopping approach, December 2018
                                                                • Appendix – Data Sources and Abbreviations

                                                                  • Data sources
                                                                    • Consumer survey data
                                                                      • Abbreviations and terms
                                                                        • Abbreviations
                                                                          • Terms

                                                                          Impact of Private Label in the Online Food and Drink Market - US - February 2019

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