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By Ryne Misso
Amazon’s acquisition of Whole Foods Market could further the growing positive perception of private brands among consumers. Several Whole Foods’ 365 products are currently listed on Amazon’s Marketplace. After the acquisition, expected to be finalized later this year, consumers can expect a big spike in the number and variety of Whole Foods’ private brands available on Amazon.
By making these high-quality private brands more accessible to average consumers, it is not out of the question that in the near future consumers may even prefer or seek out private brands over national brands.
In the grocery channel in the United States, private brands have seen their market share grow to 24 percent across all categories. This fact is not lost on retailers and manufacturers based in the United States, especially with the June launch of Lidl’s first store locations on the East Coast. Lidl is set to bring its store brand strategy with it, which will have big implications for national brand manufacturers and competing retailers.
Shopper survey data from Market Track reveals that the majority of grocery shoppers buy private brands. Across all ages, 78 percent of shoppers buy store brands. What’s more, a majority (69 percent) also believe that private brands contain the same ingredients as national brands, while 67 percent believe they are of the same quality as national brands.
National brand manufacturers will continue to be under threat from private brands as retailers grow their assortment and as consumers become less concerned about taking a hit on quality by choosing a store brand.
National brands will need to find ways to enhance their value and quality proposition relative to private brands, knowing that retailers like Lidl and Amazon may be carrying the store brand flag forward in the U.S. market over the years to come.
Ryne Misso is director of marketing for Market Track, a provider of advertising and promotional tracking, brand protections and e-commerce pricing solutions.