Private label products are more profitable than their national brand counterparts, according to a new study.
Private label products yield 35% profit margins compared to 26% for national brands, according to U.S. Online Grocery Shopping Takes Off but Remains a Challenging Channel, a report from Mercator Advisory Group.
Other findings from the report include:
- Net profit margins for US grocery stores are razor-thin: 1-2%
- US consumers average 2.1 grocery trips per week
- Average US household grocery spending is $109 per week
- Millennials make the most trips: 2.3 times per week
- Generation X consumers grocery shop 2.2 times per week
- Boomers grocery shop the least per week: 1.9 trips on average
“Consumers want convenience and immediacy in their everyday shopping routines,” says Raymond Pucci, director of merchant services at Mercator. “Grocers have been late to the online party, but now they are going all out to support customers that prefer online shopping. But grocery order fulfillment is labor intensive and last-mile delivery is expensive, so the online channel will be financially challenging for grocers.”