Profitero: Private labels pushing out CPGs in search results

Dive Brief:

Private labels have increasingly taken up space on both Target and Walmart shelves during the pandemic, and now, a report from Profitero shared with Retail Dive indicates that they're taking up space on the first page and top five slots of retailer search results too.
Target has the highest share of private labels in page one search results, with Walmart and Amazon holding less share. Target's private label food and beverage products occupy close to a third (27%) of organic and paid page one search results, while that number changes to 21% for cleaning supplies, and 17% for health and beauty.
Target's private label options in those categories also hold the largest share in organic search results, each comprising more than a third of the top five organic search results. Meanwhile, Walmart's private label health and beauty, and cleaning supply products make up 20.6% and 25.2% of the top five organic search results, respectively.

Dive Insight:

Profitero's findings point to intensifying competition between private label products and national brands vying for a share in shoppers' search results. Since the COVID-19 pandemic began, private brand sales increased by 29%, and regular brand product sales grew by 24%, according to Nielsen statistics cited in the report.

However, even though both private label and national brands have seen a bump in sales during the coronavirus pandemic, securing the top spots within search results can make or break product sales. The report found that 70% of purchases occur on page one search results, and being moved to the first page from the second page can result in a 50% sales bump.

During the pandemic, both Walmart and Target worked to elevate their private label offerings.

Last September, Walmart released its Free Assembly clothing line with items priced between $9 and $45. In March, Walmart enlisted fashion designer Brandon Maxwell to serve as creative director of Free Assembly and Scoop. Meanwhile, Target's activewear brand All in Motion brought in $1 billion in sales in its first year.

Retailers in other sectors have also doubled down on private labels. Bed Bath & Beyond has focused on private label housewares as part of its larger turnaround strategy. In March, Bed Bath & Beyond announced plans to launch at least eight private labels across various categories, including bed, bath, kitchen and dining, and storage and organization. This month, the retailer rolled out its Simply Essential brand, the third private label it has launched this year.

For now, private label brands only bring in a fraction of sales for retailers, but research suggests that consumers are becoming less loyal to certain brands. Per research from Kerry and Nielsen IQ, private-label products only make up 4% of all grocery e-commerce sales, but their share has increased fourfold during the past two years. And according to research from Alix Partners cited in the report, one-fourth of consumers tried a private label brand for the first time during the pandemic and about 30% of them said they planned to continue using those products.