Exhibit 3
Has inflation really led to the increase in assortment of private label products, and how exactly, does this compare to national brand?
Read this report to discover how Datasembly uncovered the real story about private label assortment growth using real-time, granular data to uncover:
Read on to learn about private label growth in 2023
Everything we read tells us private label (PL) brands are growing. But where, and how? Although dollar sales are growing relative to national brands, when it comes to assortment, PL is actually shrinking relative to national brands (NB).
Source for Dollar Sales: Private Label Manufacturers Association (https://www.plma.com/about_industry/store_brand_facts)
Private Label Share of Assortment defined as the number of unique UPC-store combinations of a particular brand, private label in this case, as a percentage of UPC-store combinations for all brands in a given category.
Can both be true? Absolutely. While PL assortment is shrinking, PL sales are growing. Leading us to conclude that despite fewer unique PL products, retailers are able to sell a greater quantity of them. Exhibit 2 illustrates how it breaks down in 4 major categories
Change between
Jan. 2022 & Jan. 2024
Let’s talk about how, and why this matters.
The dynamic between private label and national brand has been exacerbated over the last two years with a spike in grocery inflation that hasn’t been seen in decades. See exhibit 3 below. Datasembly’s Grocery Price Index. This has created a market where consumers are increasingly value aware and open to alternatives.
In fact, according to McKinsey's Consumer Pulse Survey 2023, 66 percent of consumers have sought out less-expensive goods, an increase of four percentage points from 2022. Additional reports from the PLMA (Private Label Manufacturers Association) demonstrate that this trend continues.
Establishing a clear line of sight to these shelf level dynamics now will create immediate and timely opportunities for both retailers and manufacturers.
Using Datasembly’s comprehensive collection, which includes price, promotion and assortment for most every product in every store, we compared assortment growth for both private label (PL) and national brand (NB) over the last two years for the following categories: beverages, cereal, dairy and snacks.
We specifically reviewed four of the largest nationwide retailers - Walmart, Target, Kroger and Albertsons - to measure the change in PL share of assortment over this inflationary period.
The exhibits above demonstrate the answer to the question, has PL share of assortment increased in the last two years. Using this data from Datasembly, we now know that the answer is, no. While there are many sources that use sampled, averaged or surveyed data to answer this question, it can only be answered using real-time, hyper-local data that includes the true assortment being seen on shelves in every store, online and brick and mortar.
Drilling down at a specific retailer, we see the overall PL assortment is actually growing, but NB assortment is growing faster as it continues to challenge and compete for more shelf space than private label products. Exhibit 4 illustrates a common example of how both are growing assortment, but NB is growing faster.
Change between
2022 & 2023
Armed with store level competitive information that NB assortment is increasing, retailers are positioned well for joint business planning on commercial opportunities in promotions and trade spend with NBs who continue to maximize UPCs on shelf, for every category in the store.
But there’s a lot more to the story, and understanding the details reveals new market opportunities. For each national retailer below we clearly see a differentiated mix and formula for store wide private label share of assortment. See exhibits 5-8.
CPGs: as different retailers prioritize different categories, are your brands poised to compete? Do you have the data to be sufficiently nimble to shifts in assortment? As you lose dollar sales to private label, can you compete by adding / changing assortment options? Or should you change your prices or promotional strategy?
A deeper dive into category level detail across retailers brings more information to the surface. Take, for instance, a view of the dairy category across these key retailers. See exhibit 9. Using Datasembly’s unique real-time data, we see an overall tightening and increased competition within PL dairy assortment.
Given this tightening of PL share of assortment across the dairy category, how should all retailers try to compete to maintain / grow their own brands? While a blunt strategy would be to change assortment, price, and promotion across all stores or at large groups of stores (e.g., a region), a much more surgical approach would be to react with specific tactics at each individual store based on the exact assortment of nearby competitors.
Here’s the dairy detail further distilled to just yogurt. Take a look at PL vs. NB assortments at this key retailer in Exhibit 10. Immediate opportunities emerge for both local retail as well as the NB as they optimize their shelf for the category.
If you're a retailer with direct control of your shelves, should you either stem the decline in PL assortment, or can you charge more for NBs whose assortment is increasing? If you’re brands A or E, you’ve lost share of assortment in the last several months to brands B and D. What would you have done differently had you known that in real time? Might you have allocated trade dollars more effectively?
It’s at the brand level where things can get very interesting. Take, for instance, leading national brand A vs leading national brand B in just the yogurt category at one of the largest retailers in the US
Yogurt Assortment wars at a major retailer: Brand A vs. Brand B vs. Private Label, January 2022 vs. January 2024
Looking at Exhibit 11, we see both brand A and brand B significantly increased their assortment and have similar levels of total assortment in yogurt. However, their paths to get there were very different.
Brand A, while they still have more unique UPCs than anyone, they actually shrank their assortment but more than made up for it with a big increase in distribution. Comparatively, brand B greatly increased their number of unique UPCs and, to a lesser extent, their distribution, both of which contributed to their assortment growth. And this retailer’s private label yogurt offering, though small in UPC count, continues to add to its store count and amassed the highest geographic shelf penetration across the US. The opportunity to address these changes as they are happening can only be had with local, shareable, granular data.
CPGs: What would you do when you see competitors launching new UPCs in real time? Perhaps you offer promotions in hopes of inhibiting competitor growth, but only at those specific stores where new competitive products have launched.
The comprehensive collection at Datasembly will unmask critical details for both PL and NB share of assortment enabling both the visibility of broad, market trends and the actionability to make decisions at local levels. Both retailers and national brands need to track these dynamics with an increasing level of frequency and granularity to take advantage of this moment in the market. Furthermore, a comprehensive, fully shareable competitive intelligence solution delivered when it matters the most has the power to change trajectories.