The rapidly evolving landscape of private label brands has seen significant milestones, with Walmart’s Bettergoods and Target’s Dealworthy spearheading the movement. Since their launches in early 2024, these brands have experienced remarkable growth, capturing the attention of budget-conscious consumers seeking high-quality, cost-effective alternatives to name brands. According to a Numerator report, both Bettergoods and Dealworthy have made significant inroads, reaching 9% and 6% of U.S. households respectively, making them the fastest-growing private labels this year.
The Appeal of Private Labels
Shifting Consumer Preferences
Private labels, traditionally seen as lower-quality alternatives to name brands, are now recognized for offering comparable, if not superior, products at more affordable prices. This shift is largely driven by consumers who are more budget-conscious and discerning than ever before. The appeal of private label grocery items, in particular, is evidenced by the fact that nearly every U.S. household (99.9%) has purchased a private label product in the past year. This statistic underscores the growing acceptance and reliance on store brands.
Categories such as home improvement and pet products have witnessed a substantial market share for private labels, accounting for 33.9% of sales in club retailers and 28.5% in mass retailers. On the other hand, the beauty and electronics categories have seen minimal private label penetration, with market shares under 10%. This discrepancy highlights the varying levels of consumer trust and preference across different product categories. As private labels continue to gain traction, there is potential for growth in these underrepresented sectors.
The Role of Major Retailers
The private label market’s robustness is particularly evident in the grocery sector, where stores like Aldi and Trader Joe’s predominantly feature store brands. Aldi’s private label products account for an impressive 80% of their sales, while Trader Joe’s sees about 70%. This dominance suggests that consumers shopping at these stores have a strong preference for private labels, likely driven by perceived value and quality. The slight increase in private label grocery sales (0.4%) over the past year further supports this trend, even as other sectors like home and garden saw a decline.
Walmart’s Bettergoods and Target’s Dealworthy have capitalized on this trend, offering a wide range of private label products that appeal to budget-conscious consumers. These brands’ rapid growth reflects a broader shift in consumer behavior towards value-oriented shopping. Interestingly, private labels only account for 3% of Amazon’s sales volume, indicating that traditional brick-and-mortar retailers still hold a significant edge in this space. As consumer preferences continue to evolve, major retailers are likely to expand and refine their private label offerings to meet the demand for high-quality, affordable products.
Market Trends and Future Growth
Consumer Trends and Projections
The inclination towards private labels shows no signs of slowing down, with evidence suggesting continued growth in the coming years. According to FMI’s report from June, nearly half of surveyed shoppers indicated they planned to buy more private labels in the next year. This growing consumer interest is a testament to the increasing quality and perceived value of store brands. Circana’s report further highlights this trend, noting a 6% year-over-year increase in private label sales, amounting to $217 billion in 2023. In comparison, national brands recorded slower sales growth, underscoring the competitive edge of private labels.
This surge in private label sales reflects shifting consumer priorities, where cost considerations play a pivotal role in purchasing decisions. The success of Walmart’s Bettergoods and Target’s Dealworthy is indicative of this trend, as these brands have rapidly captured a substantial portion of the market. As private labels continue to gain momentum, retailers are likely to invest more in the development and marketing of their store brands, further enhancing their appeal to consumers seeking value without compromising on quality.
Challenges and Opportunities
The private label brand landscape has been dynamically transforming, with Walmart’s Bettergoods and Target’s Dealworthy leading the charge. Launched in early 2024, these brands have seen impressive growth, appealing to budget-conscious consumers who are looking for high-quality, affordable alternatives to established name brands. Research from Numerator highlights that Bettergoods and Dealworthy have significantly expanded their market reach, with Bettergoods now present in 9% of U.S. households and Dealworthy in 6%. This exceptional uptake makes them the fastest-growing private labels of the year. Their success reflects a broader consumer trend of shifting away from more expensive name brands towards private labels that promise similar quality at a lower price. Walmart and Target have strategically capitalized on this trend, resulting in robust acceptance and an increased customer base. As more shoppers prioritize value without compromising quality, the dominance of Bettergoods and Dealworthy seems likely to continue. Consequently, these brands set a new benchmark for private label products in the retail industry.
