Why Sam's Club is concentrating on private label products

Dive Brief:

  • Sam’s Club, the membership warehouse club division of Wal-Mart, has upgraded its Member’s Mark private label brand by offering hand-picked ingredients and premium products across both its food and general merchandise categories, according to Food Business News.
  • The retailer created a team of product developers, culinary experts and food scientists to streamline 21 private brands into one revamped line during the st year. 
  • In 2017, Sam’s Club will introduce 300 new items and renovate approximately 600. Going forward, the grocer also plans to add close to 300 new private label products per year. 

Dive Insight:

Sam's Club's revamped private label offerings will include premium, trendy items like honey sourced from a cooperative representing hundreds of independent beekeepers and lasagna produced by a one-woman business.

This move comes as other grocers are finding success with private label brands. The Private Label Manufacturers Association’s 2016 Private Label Yearbook showed that store brand sales reached an all-time high of $118.4 billion in 2015, representing a record 17.7% of the total market.

This growth has led retailers to invest more in their store-branded lines, upping their game on packaging, design and ingredients to differentiate from competitor manufacturers and retailers. Still, heavily investing in private labels still comes with some risks. A recent report by Trace One revealed 44% of consumers don’t buy private label brands because they trust national brands more.

Consumer sentiment will likely continue to change, however, as more millennial shoppers enter the grocery space. For younger demographics, affordable pricing is often the strongest purchase motivator — something grocery branded products consistently deliver on. Sam’s Club is also offering transparency in its private labels, which should also drive interest in the products.

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Filed Under: Grocery Packaging / Labeling
Top image credit: Flickr; Mike Mozart